Tower's new broom gets busy

By KEVIN TAYLOR

Tower's new chairman will seek to axe directors' retirement allowances - and pay board members more up front to attract the best people.

Olaf O'Duill says the board also plans to cut the vast majority of Tower's independent directors in a shake-up that ensures the main Tower board is abreast of all the company's operations.

He will outline his plans to shareholders of the transtasman company at the March 27 annual meeting in Wellington.

Melbourne-based O'Duill replaced long-serving Colin Beyer as chairman last month after a share-price dive and a September year loss of $74.9 million.

He told the Business Herald the removal of independent directors would create a more divisional approach, improve reporting lines and allow the Tower Ltd board more oversight of the organisation.

Although he could not say how many of the 20 independent directors Tower has on subsidiary boards would go, some - on the Tower Australia, Tower Trust, and Bridges boards - would have to stay for statutory reasons.

Tower may have to pay more than $300,000 in retirement allowances to Beyer, along with six-figure sums to two other retiring directors, Sir Colin Maiden and Lindsay Cuming.

O'Duill said he would push for retirement allowances to go in future because modern corporate governance required companies be more transparent.

"The shareholders do not know what retirement allowances are due to every director, whereas if it's an annual, more commercial payment to directors, they can see it every year."

He said the payments to the three retiring directors were not decided at last Monday's board meeting in Sydney.

But he said there was a contractual obligation on Tower to pay retirement benefits - and the company would meet that obligation. "What the directors do after that is their own decision."

O'Duill said if Tower wanted the highest-calibre directors, it had to pay commercial rates, and resolutions on new pay levels would go to next year's annual meeting.

"The actual director's fee for being a director of Tower Ltd is not, in my view, commercial," he said.

In the September year the main Tower board paid 10 directors - excluding former CEO James Boonzaier - a total of $651,275.

Twenty other directors on subsidiary boards cost a further $549,511.

On the axing of independent directors, O'Duill said he wanted a more divisional structure.

For the most part management would be appointed to the subsidiary boards as executive directors.

He said it bothered him that the main Tower board had been detached, which was one of the reasons directors missed some emerging operational issues last year, particularly in Australia where many of the losses came from.

"I want the main board involved in all of the businesses."

He said the plans were part of a wider re-evaluation of executive pay and allowances.

"I think if organisations are serious about doing the right thing by shareholders, then they had better have the best corporate governance regime they can find.

"If the mood has changed about how and when directors be paid - then fine, we will deal with it."

Contested payouts

Payouts for departing directors and executives are not just an issue for Tower. They've also been big news across the Tasman. Some cases:

March 13: AMP pays former chief executive Paul Batchelor A$2.1 million ($2.28 million), not the A$18 million ($19.6 million) he was said to have been seeking.

March 5: Former AMP chairman Stan Wallis refuses his A$1.6 million ($1.7 million) retirement payout, citing the difficulties AMP is facing.

Feb 25: Wine giant Southcorp says former chief executive Keith Lambert will receive a A$4.4 million ($4.8 million) golden handshake - despite having sacked him after a profit crash.

Feb 12: Commonwealth Bank of Australia says former Colonial First State chief executive Chris Cuffe will get A$32.75 million ($35.6 million) after his resignation.

Jan 5: BHP Billiton chief executive Brian Gilbertson quits, and gets A$30 million after six months' work.