Incoming Wesfarmers CEO Takes a 28% Pay Cut

Imagine getting paid $4 million less than the person you replaced… Well, that’s what could be happening to incoming Wesfarmers CEO Rob Scott.

Scott agreed to a $1 million cut to fixed pay and a $3 million cut to bonuses. However, he still has the potential to earn $7.5 million annually.

As reported by The Australian Financial Review:

Mr Goyder, who steps down as chief executive in November, takes home fixed remuneration of $3.5 million while his total package for meeting “target” performance is $10.5 million.

Mr Scott will be paid $2.5 million in fixed annual remuneration but has the ability to earn up to $7.5 million for “target” performance.

Mr Scott can earn up to $10 million if he achieves “maximum performance”, which will allow him to earn a bonus of three times his fixed pay. That is a 28 per cent reduction on Mr Goyder’s maximum of $14 million.

Incentivising management

$7.5 million is still more money than most people can spend in a year. However, the move to further incentivise management is positive. This is something you should look for in a business.

Why? Because it is management who execute and plan a company’s future. With great management in place, your investment will have a better chance to succeed.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

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