Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Telecom chief's overall pay dips but 2012 bonus rockets

Analysts say Telecom chief executive Paul Reynolds has earned his keep despite company shares dropping 44pc on his watch. Photo / Paul Estcourt
Analysts say Telecom chief executive Paul Reynolds has earned his keep despite company shares dropping 44pc on his watch. Photo / Paul Estcourt

Telecom chief executive Paul Reynolds was paid $2.1 million less for the 12 months ended June 30 than in the 2009/10 financial year.

The upside for the departing Telecom boss is he earned a $3.1 million performance-based bonus, which forms part of his remuneration package for the 2011/2012 year.

During the 2010/11 year, the Scotsman received a base salary of $1,750,000 and special payments for items like accommodation and travel costs of $373,074.

In the 2009/10 year, Reynolds brought in the same base salary of $1,750,000 and special payments of $338,111.

The difference between the two years comes in the performance-based bonus he was paid .

Under Reynolds' remuneration regime, he is paid his bonus during the year after the one it is awarded in.

Because Reynolds earned a heavily reduced bonus of $900,000 in the 2009/2010 year - partly due to the mass failure of the company's XT network - his pay packet for the 2010/11 year took a hit.

The bonus earned during 2008/2009 and paid in the 2009/2010 year was $3,062,500.

The amount Telecom pays its staff drew criticism in April from the Shareholders Association, which said the company's salaries were unacceptably high when measured against the performance of its shares.

According to Telecom's 2010 annual report, 2945 of its 8629 employees (almost a third) earned more than $100,000 during the 2010 financial year, with eight earning over $1 million and 32 over $500,000.

Reynolds has received a total of $16.3 million in remuneration since he joined Telecom in September 2007.

Over the same period, Telecom's share price has shed almost $2, falling to a low of $1.79 in August last year.

The company's stocks have since clawed back, especially after Telecom was awarded the bulk of the Government's ultra-fast broadband contracts in May.

They closed up 4c yesterday at $2.51.

Despite the shares losing around 44 per cent on Reynolds' watch, commentators have praised the Scotsman's performance.

"He's had the most extraordinary period to lead the company through and all this stuff's been imposed on him by successive Governments which he has been battling against. My feeling is that he has done well in an incredibly difficult environment," Forsyth Barr analyst Guy Hallwright told the Herald last week.

Telecom spokesman Ian Bonnar said the pay details were released yesterday to allow the public to focus on the company's demerger scheme booklet, due out in the middle of this month.

It will further reveal details on Telecom plans to separate its retail business from its network arm, Chorus, by the end of November.

The company proposed the split as part of its bid for the Government's ultra-fast broadband contracts, which it won the bulk of in May.

Network-operator Chorus will become a separate public company and deploy thousands of kilometres of fibre internet cables in 24 towns and cities around New Zealand.

Following the release of the booklet, Telecom shareholders will vote on whether it should go ahead.

- NZ Herald

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