Australian prime minister Malcolm Turnbull, who takes home less than 10% of Australia Post CEO Ahmed Fahour’s $5.6 million pay packet, thinks the boss of the government-owned business is overpaid.
“I think that salary, that remuneration is too high,” Turnbull said after the details of Fahour remuneration package – a $4.4 million salary and $1.2 million bonus last financial year – emerged, against the wishes of the company, which wanted to keep them private, worried about “brand damage”.
The PM said he’d raised the issue with Australia Post’s chairman, John Stanhope.
“I know it’s a big job, it’s a big company. I know the company has been able to improve its position but, in my view, and I say this as someone who spent most of his life in the business world before I came into politics, I think that is a very big salary for that job,” Turnbull said.
“I’m entitled to my opinion, just like every other Australian is, and I think many would agree with me.”
The next highest pay packet for a government business in NBN boss Bill Morrow, who’s paid $3.6 million to roll out the $50 billion broadband network.
The median pay for the CEO of a top 100 listed Australian company last year was $1.72 million.
Fahour’s remuneration has double since he joined the postal service in 2010. Meanwhile, the company’s profitability went over a cliff as the letters business plunged into a sea of red.
Last year the company made $36 million on revenue of more than $6 billion, having lost $222 million in FY15 – its first time in the red in 30 years.
At that point Fahour was predicting the letters division would cost the company $5 billion in accumulated losses over five years, a figure he subsequently revised downwards last year to $1.5 billion, having increased the price of postage by 42% to $1 and created a two-tier system that takes up to six business days to deliver mail.
The price to get a letter to where in needs to be within four days more than doubled to $1.50.
The company is cutting 1,900 jobs over three years.
But letters still cost the company $138 million in FY16, with the deficit made up by the parcels side, which saw profit increase by 8% to $314 million. The internet has come to Australia Post’s rescue, and more than half its revenue – around $3.2 billion – comes from parcels.
But if Australia Post was concerned about brand damage, then it needs to look beyond executive pay. Even after giving itself even longer to deliver mail “on time” in FY16, nearly 4% of deliveries were still late, albeit an improvement on 2015’s 5.2% late.
Last year, Fahour announced plans to charge customers up to $9 to hold parcels before scrapping the idea in response to a customer backlash. And in recent years, the business has struggled with technological problems, from glitches in its online payment gateways froze funds, to misdirected parcels, and Christmas delivery problems.
Even the company’s postcard app failed, with holiday messages arriving up to five months after they were originally sent, forcing Australia Post to pull the app.
Defending Fahour’s pay packet today, Australia Post said it “takes into account the size and complexity of the organisation, which has an annual turnover of more than $6 billion”.
“It also reflects the large-scale transformation underway and that more than 73% of its revenue comes from the non-regulated side of the business where it is competing with major global players such as DHL, FedEx and Toll,” the company said.
It’s the sort of argument companies put all the time when defending executive pay. It’s worth noting Australian Post top six execs, including Fahour, took home a collective $17 million in FY16.
Meanwhile, ABC political editor Chris Uhlmann had a look at what the top postie in other countries around the world are paid to do the job, no doubt in similarly trying circumstances against competition from the same global logistics giants. He also took into account the size of each nation and its population, considering that Australia has 23 million people on 7.7 million square kilometres of girt by sea.
What Uhlmann found was that his peers in Canada and the US take home around a 10th of Fahour’s pay.
Canada Post CEO Deepak Chopra, gets $CAN500,000 ($AU497,000), servicing 35 million people across 10 million sq km. The USA’s Postmaster General Megan Brennan gets by on $US415,291 ($AU543,616) looking 319 million people across 9.8 million sq km
Even Moya Greene, CEO of the UK’s now privatised Royal Mail makes less than half Fahour pay at £1.529 million ($AU2.5m) while looking after 64 million people on 244,000 sq km.
“So the managing director and chief executive of Australia Post is not just the highest paid man in the Commonwealth’s service, he appears to be the highest paid postal executive on the planet,” Ug
Based on Fahour’s salary, the CEOs of logistics companies cited as rivals by Australia Post had better hit shareholders up for a pay rise.
DHL Express CEO Ken Allen remuneration is considerably less than Fahour’s at 3,144,059 euros ($AU4.4 million) on revenue of euros 13.66 billion ($AU19.12 billion)
Having built a global brand FedEx founder and CEO Frederick W Smith rewards himself with $US8.67 million ($AU11.35m) from his NYSE-listed business on revenues 10 times larger than Australia Post’s at $US47.453 billion ($AU62 billion).
And Japan Post Post Holdings Co. paid $AU6.5 billion for Australian-owned Toll Holdings in 2015. Toll’s former MD Brian Kruger, who left the business at the start of 2017 having seen it through the transition, was paid $AU4,978 million in total in 2014 – the company’s final annual report – including $1,792 million in salary, plus $1,082 in short term incentives and $1,791 million in long-term incentives. Toll had revenues of $8.8 billion that year and net profit after tax was up 5.7% to $298.5 million.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.