Fletcher Building boss Ross Taylor gets 34% pay rise to $6.58m after major corporate turnaround

Ross Taylor, chief executive of Fletcher Building. Photo / Supplied

Fletcher Building's boss has enjoyed a 34 per cent annual pay rise, making $6.58 million in the latest year after steering the giant conglomerate to new financial heights.

"We've achieved it as a company - the buck stops here," says chief executive Ross Harold Taylor, raised at Arana Hills 12km outside Brisbane, a civil engineer with first-class honours from Queensland University who has staged one of this country's largest corporate turnarounds.

The head of New Zealand's largest listed building manufacturer and supplier, employing 14,700 people, earned $6.58m for the June 30, 2022 year, up from the previous $4.91m.

Taylor got a $2.1m base remuneration (previously $1.8m), other benefits like medical insurance and KiwiSaver of $131,000 ($129,000) a $3.3m short-term incentive payment ($2.8m) and $970,000 one-off share-based retention reward (nil).

All up, he received $6,589,027 in the 2022 year, up on the $4,912,929 last year.

Taylor stressed the performance-based nature of his pay, saying the amount received was a true reflection of how the company had done.

"If I look at my pay, 30 per cent is base and 70 per cent is all down to performance so if I perform, I do better. We've achieved as a company. The buck stops here. You get the good with the bad."

So will this tenant of Parnell who spends some time regularly in Sydney finally buy an Auckland house? "I'm not going to regale you with the machinations."

Fletcher's annual report is full of green "pass" marks for Taylor's financial, safety and individual achievements. Orange dots indicate "not achieved" and yellow marks a partial achievement but none of those colours blotted his record book this year.

Taylor when the NZICC was burning in late 2019. Photo / Jason Oxenham

Taylor went all green and in fact was above target on EBIT, group cash and safety gateway outcomes - those green dots circled in green to mark an outstanding performance.

"It's not the pay rise as such. It's remuneration which is based on whether you perform better or worse over different years. It's the performance that's changed as opposed to the base."

On the green dots: "Shareholders like to see that. That's being very transparent as to how the board sets my targets. We put that out so the shareholders can see how the board has thought about it. Where the circles are, that's where some of the outperformance comes from."

Analysts are praising the result. Jarden's Grant Swanepoel noted a strong outlook: "Company indicates continued solid pipeline of committed work in their end markets. Customers and forward indicators point to ongoing strong volumes in residential, commercial and infrastructure, there are strong pricing disciplines in place to cover inflation increases and performance improvements embedded."

Fletcher's balance sheet remained strong, with net debt at $670m. The company planned to spend around $500m in the next three years. EBIT from Australia had risen 25 per cent, Swanepoel noted.

Grant Swanepoel of Jarden noted the strong balance sheet. Photo / supplied

Forsyth Barr analyst Rohan Koreman-Smit said "The positives were a strong dividend, better cash flow and lower net debt. There was also some meaningful improvement in the Australian businesses and the other positive was that although the housing market had got a bit worse, Fletcher hasn't seen a deterioration in the outlook for the next 12 months."

The result was in line with expectations because detailed guidance was issued at the investor day in June, he said.

Taylor said today he spends around 80 per cent of his time in New Zealand and the rest in Australia, "give or take. It's never as pure as that. It's maybe once a month but not as formulaic as you think".

Two children live in London so he and wife Kathy visited there for the first two weeks in July. He plans to return to Sydney for Christmas, "chasing children again".

All divisional gross revenue rose, except for residential and Australia and building products made the most. Around 1000 housing sales are expected in the 2023 year.

"On Australia - that was really pleasing. We've had the goal to get the Australian division margins up. It gives confidence in the momentum in FY23.

"In terms of building products, it's continued to perform well. We've done a lot of investment in that business in many of the product segments to improve performance which has been part of the overall journey to invest in manufacturing."

When he joined in 2017, Taylor found a business left by ex-CEO Mark Adamson in need of change so from Sydney in winter 2018, he launched a five-year turnaround strategy, cutting staff and costs, enduring Covid lockdowns, selling less profitable arms, streamlining existing operations, cutting dividends and exiting vertical high-rise where losses of nearly $1b were recorded over a two-year period.

On the strategy, Taylor said today the business was in a new phase "so what we talked about four years ago is done. But you never stop looking forward. We're always evolving where we're focused and how we're driving the business. The reason we kept the targets that we put there in 2018 alive is I didn't want to walk away from them. It was keeping us honest in the eyes of our shareholders.

"By getting to where we got to in FY22, we did what we said we were going to. It's an evolution of our strategy - and I don't have a name for it. What we've done now is get ourselves in a good place to take the business on some exciting next steps. That's the important thing of what we've achieved."

Asked if new businesses were being eyed, Taylor refuted that: "A lot of what we're planning to do is invest organically. We'll look at the odd bolt-on. We'll look at what we can add to what we're doing now and logical."

On the NZ International Convention Centre, Taylor said: "The project is going really well. We're starting on the new roof and the car parks."

Fletcher Construction had a forward order book of $3.2b but has mostly exited high-rise construction after it lost nearly $1b from that riskier end of the market on three big jobs at the end of the last decade.