Generic scenes at Clontarf Reserve. Postie bike, Australia Post, post, letters, mail. Thursday 4th May 2017 AFR photo Louie Douvis . MELBOURNE, AUSTRALIA – NOVEMBER 03: Australian Post CEO Ahmed Fahour has his shoes shined at the Julius Marlow shoes shining stand during Melbourne Cup day at Flemington Racecourse on November 3, 2015 in Melbourne, Australia. (Photo by Jesse Marlow/Fairfax Media)
AICC. L to R Ahmed Fahour, MD and CEO of Australia Post and David Mortimer AO, Chairman of Australia Post speaking at Todays Australia Israel Chamber of Commerce lunch today in Sydney. 27 July 2010. AFR Photo by Andrew Quilty.
SYDNEY, AUSTRALIA – JUNE 27: The new CEO of Australia Post Christine Holgate during the announcement presser at the Four Seasons Hotel on June 27, 2017 in Sydney, Australia. (Photo by Ben Rushton/Fairfax Media)
Unions have called on the government to sack Australia Post chairman John Stanhope after it emerged former chief executive Ahmed Fahour received a $10.8 million pay packet in his final year.
Mr Fahour’s $8.7 million in bonuses on top of a $2.04 million base salary attracted criticism from various quarters on Friday, from the Prime Minister down, although the company laid the blame on a contract struck back in 2010.
The details were contained in the Australia Post annual results which were released yesterday, with a special renumeration report for its executives. During his tenure, Mr Fahour received almost $34million, according to estimates by Fairfax Media.
“[John] Stanhope should resign immediately,” the Victorian state secretary of the Communications Workers Union, Leroy Lazaro, said.
“If he refuses, the minister should step in and sack him. It is obscene that Ahmed Fahour??? is walking away with nearly $11 million as a pay-off for slashing the postal services of all Australians. Our members, who are receiving a less than CPI [inflation] pay rise, are absolutely outraged.”
Mr Turnbull described Mr Fahour’s pay as “too high” and said it was based on decisions taken by the Australia Post board some time ago.
“We have now made changes to make sure the Remuneration Tribunal sets the salary at Australia Post … [and] taken steps to ensure the salary is proportionate to the task at hand,” he said on Friday.
Mr Fahour announced his resignation in February, but did not leave until late July. He is currently overseas and could not be contacted for comment.
Communications Minister Mitch Fifield also leaned on Mr Stanhope to explain the payments, saying the board was responsible.
“This situation cannot happen again as this government in February gave the Remuneration Tribunal the authority to cap the new managing director’s salary.”
Mr Stanhope also tried to distance himself from Mr Fahour’s pay packet, saying the original employment contract signed in 2010 was to blame.
“Back when the contract for the former CEO was entered into, before my time, community expectations were different,” Mr Stanhope said.
“Times were different in 2010. There is no question about that. And contracts were very different.
“It was a contract aimed at enticing a high-level, talented executive to transform Australia Post and that was the basis of that contract. And we have observed our obligations under that contract.”
Australia Post has now scrapped the long-term incentive plan to “adjust for community expectations”, Mr Stanhope said.
However, financial records show Australia Post changed the bonus program in July 2014 when Mr Stanhope was chairman and Malcolm Turnbull was Communications Minister.
An Australia Post spokesman said the 2014 scheme was a “continuation of the initial agreement in 2010” and introduced new performance hurdles. However, it also introduced a new long-term bonus program and “stretch targets” that gave Mr Fahour the opportunity to earn 150 per cent of his short-term bonus, or up to $3.2 million a year on top of his base salary.
The long-term bonus gave him the chance to earn $6 million over three years.
It emerged on Friday Mr Fahour has received $4 million but missed out on the final $2 million because of a “failure to secure a major contract with government or a large corporate before June 30, 2017”.
Increasing stamp prices from 70 cents to $1 and six-day delivery helped him secure the $4 million bonus.
The details of the new incentive program were kept secret until earlier this year when a Senate Committee forced Australia Post to resume publishing pay details.
And the chairman who recruited Mr Fahour, David Mortimer, said he “absolutely” stands by the contract written in 2010 and added Mr Fahour’s pay at the time was “lower than his predecessor’s”.
“When I hired Ahmed Fahour, which I did and I take full responsibility and/or credit for it … I am very proud of it, he came on board [and] did an outstanding job and he was appropriately paid.”
In 2010-11, Mr Fahour’s total package was worth $2.45 million.
“Certainly what he was paid in 2010 was perfectly acceptable for someone who took on a major restructure of the business, which he did very, very successfully,” Mr Mortimer told Fairfax Media.
“I can’t comment about 2017, but his task in 2010 was to restructure and re-modernise Australia Post and he did that with great skill.”
Mr Stanhope pointed out that Mr Fahour received 90 per cent of his short-term incentive and only 66.6 per cent of his long-term incentive. His $10.8 million package does not include any termination payment.
Victorian Liberal senator James Paterson, who chaired the committee that forced Australia Post to reveal executive salaries, said it was “scandalous” that directors thought it would be OK to keep Mr Fahour’s salary a secret.
“At some point, the board thought it was an appropriate salary and thought it was acceptable to keep it out of public scrutiny,” Senator Paterson said.
Incoming Australia Post CEO Christine Holgate will receive a base salary of $1.375 million a year, with the potential to earn 100 per cent of that as a bonus.