Telecom's $5m boss gets bonus despite profit fall

Paul Reynolds' package including salary, performance incentive and travel allowance, will top $5 million. Photo / Glenn Jeffrey

Telecom will pay chief executive Paul Reynolds his full performance bonus despite a fall in profits.

Details of his pay package - and other Telecom pay deals - were revealed in the company's annual report.

Reynolds' total package will amount to more than $5 million - a new record for a chief executive of a New Zealand public company.

While former Telecom chief executive Theresa Gattung picked up $5.4 million in 2007, that was due to a special one-off payment of $1.8 million because her contract ended early.

Telecom chairman Wayne Boyd said yesterday Telecom had given Reynolds the maximum bonus for an outstanding first full year in which he had negotiated Telecom obligations with the Government.

Reynolds was being been paid the full incentive in cash and shares at 1.75 times his base salary of $1.75 million a year. The bonus is payable next month.

Last week the telco - which has adjusted rapidly to meet regulations amid new competition and built a new mobile phone network - recorded a 43.9 per cent fall in net profit to $398 million.

But that was viewed as better than expected by the market. Some analysts hailed it as a sign of stabilisation.

New Zealand Shareholders Association chairman Bruce Sheppard said if a fall in net profit was the only factor "you would have to ask why are we paying [Paul Reynolds] a bonus? But if Telecom wins market share and the support of New Zealand he will have delivered immense shareholder value."

The Telecom annual report showed Reynolds walked away with $3.3 million last year for work he did during the eight months after he arrived in 2007.

That figure was made up from his base salary of $1.75 million, a $1.312 million performance incentive and a $243,950 special payment for travel and accommodation to and from Britain.

Boyd said Reynolds' deal with Telecom allowed the company to pay between 100 per cent and 175 per cent of his basic pay as a performance incentive.

The incentives are paid as 60 per cent cash and 40 per cent restricted shares.

Telecom paid Reynolds a 100 per cent incentive bonus for the eight months in 2007-08. But the company was paying the maximum 175 per cent of base salary for the 2008-09 financial year.

On top of his $1.75 million and performance incentive of $3.062 million, he will receive special travel payment for his family to travel to and from Britain.

A Telecom spokesman confirmed the package amounted to more than $5 million.

Also in its annual report, Telecom revealed payments to board members Patsy Reddy, who left in October last year and Michael Tyler, who left in February .

Reddy - who has subsequently been appointed chairwoman of the New Zealand Film Commission - received $465,000 while Michael Tyler received $350,133.

Boyd said the director retirement payments had been discontinued when he took over as chairman of the board, with Rod McGeoch the only remaining board member who would be eligible.

In other remuneration packages two other Telecom executives were shown to be on $1 million deals.

British import, chief financial officer Russ Houlden earned $879,148 plus cash bonuses of $122,100 and $281,273 special payments including relocation costs.

United States import chief transformation officer Frank Mount received $945,365 and $96,742 for travel and relocation.

Chorus chief executive Mark Ratcliffe earned $630,000 and $367,023 in cash performance incentives, coming in at $997,000.

Telecom shares closed up 8c at $2.72 yesterday.