Paltry pay rise after takeover coup

Jonathan Ling's sub-$3 million pay package puts him well below other company heads here and in Australia. Photo / Steven McNicholl

A 4 per cent annual pay rise after a $1 billion deal - that's the lot of Jonathan Ling, Fletcher Building chief executive.

It's still a raise of $107,823, but Ling did win New Zealand's biggest hostile on-market takeover in decades snaring the Australian-based Crane Group in April.

Fletcher's annual report, released this week, shows Ling's pay crept up from $2,713,494 in the year to June 30, 2010 to $2,821,317.

It looks paltry compared to Telecom chief executive Paul Reynolds' annual $5.1 million and almost miserable compared to Australian supermarket chief Ian McLeod, of Coles, who gets A$15.6 million ($19.62 million).

That's been criticised this week by electronics entrepreneur Dick Smith, who called McLeod's pay "whopping", "a new form of extreme capitalism" and "greed".

Bell Gully partner Brynn Gilbertson, a corporate law specialist and long-time adviser to Fletcher Building, said recently that the Crane takeover was "the first successful scrip-based takeover offer that a New Zealand company has made for an Australian company in a very long time".

Ling led that takeover and described it as a game-changer because now Australian divisions earn more than New Zealand for Fletcher.

"The actual remuneration received by Mr Ling in the financial year was $2,821,317 comprising base remuneration of $1,449,000, a short-term incentive payment of $1,015,686 and $356,631 paid in October 2010 in respect of the shares vesting pursuant to the 2007 executive performance share scheme," the report said.

Ling also has the prospect of more Fletcher shares - his long-term incentives consist of granting him 1 million share options.

The board defended its pay decisions.

"Directors are satisfied they have received independent advice that Mr Ling's terms of employment provide an appropriate remuneration package for the role of chief executive officer. As an executive director, Mr Ling did not receive any further remuneration in his capacity as a director of Fletcher Building Industries Ltd or other subsidiaries."

Fletcher's investor relations manager Philip King said Ling did not want to comment on his pay.

Of course, Ling's pay is a long way from most people's incomes.

Statistics NZ data showed the median weekly income for all New Zealanders from all sources was $529, according to the NZ Income Survey. The average total weekly earnings for New Zealanders in fulltime work was $1006.88 in the June, 2011 quarter.

This week, Fletcher's Formica announced a big push into China as part of its $200 million expansion plans, developing a new 5ha laminates plant in Jiujiang, a city of 4.8 million people in the Jiangxi province, to keep up with demand.

On Wednesday, Iplex Pipelines, owned by Fletcher's Crane, scored a A$180 million contract to supply polyethylene pipe to QGC for its Queensland Curtis Island LNG Project. QGC, a British Gas Group business, is developing Queensland coal seam gas for domestic and international markets.

In a third move, Fletcher this week said Mark Adamson, Formica's chief executive based at its headquarters in Cincinnati, Ohio, would be promoted and divisions restructured, bringing the Laminex and Formica businesses together to create a new laminate & panels division headed by Adamson.

Fletcher shares traded down 2c at $7.53.

FLETCHER PAY

* Chief executive Jonathan Ling gets $2.8m a year.
* Second-highest Fletcher executive earns $1.4m.
* Four top Fletcher staff (probably division chiefs) get $1.3m-$1.4m.
* 653 Fletcher employees get $100,000+
* Director and family member Hugh Fletcher gets $171,500.
* Chairman Ralph Waters gets $332,000 a year.
* Eight Fletcher directors get a total $1,347,750 a year.

Sources: Fletcher Building, Statistics NZ