Fletcher Building profit up 71%: CEO pay rises 17%

Wednesday 17th August 2016

Fletcher Building chief executive Mark Adamson received a 17 percent pay rise this year to $4.72 million while the building and construction company reported a 71 percent gain in full-year profit and met its earnings guidance.

Net profit rose to $462 million from $270 million for the year ending June 30, 2016 while total revenue gained 4 percent to $9 billion, with the company benefiting from New Zealand’s construction boom and improved earnings growth in its Australian businesses.

The annual report shows Adamson’s base remuneration lifted to $1,956,250 this year from $1,875,000 in the 2015 financial year. When the short-term incentive of just over $2 million, executive long-term share scheme of $749,000 and medical insurance benefit of $5,672 is added in, the chief executive’s total remuneration lifts to $4,720,262, making him one of the top paid bosses in the country. That compares to the $4,040,125 he received in the last financial year when he didn’t receive anything under the long-term scheme and the $3.73 million he earned in 2014.

Fletcher Building’s 2016 annual report outlines employee remuneration by salary band and shows two over the $2 million mark, one in New Zealand and one internationally based, while eight earned more than $1 million annually.

The short-term incentive rewards, aimed to incentivise growth in earnings and operating cash, are paid out to senior executives when they meet financial and personal targets set at varying levels – threshold, target, and maximum.

The executive long-term share scheme and executive long-term incentive scheme aim to align employee remuneration with financial outcomes for shareholders over the long-term, the annual report said.

The board made an additional grant of shares under the share scheme this financial year to incentivise senior executives to deliver on targets set under the Accelerate programme. Targets under the scheme are matching the average total shareholder returns of a selected peer group and achieving at least five percent above the target earnings per share set annually. The EPS target was 58 cents in 2015 and today’s results show 67 cents was achieved.

A total of 3.12 million shares were granted in October 2015 under the long-term share scheme, the highest to date and well above the 815,164 awarded the prior year.

Notes in the annual report say Adamson was also granted 614,571 shares worth $4,234,394 during the year which remains at risk, based on a share price of $6.89, which was the volume weighted average price for the five business days ended Sept.30, 2015. Fletcher Building’s share price is currently up 3 percent to $10.05.

Under the 2012 share options plan shareholders approved the issue of up to 1 million options to acquire shares in the company to Adamson, who is the only eligible recipient. An initial issue of half a million options was made in October 2012 with an exercise price of $6.22 soon after he was appointed chief executive in June that year.

A further issue of another half million share options was made with effect from Oct.1, 2015 at $6.89 though the exercise price is adjusted annually from the date of the grant by the company’s cost of capital, less any dividends paid. The options can’t be exercised within three years of being granted but end if not taken up within six years of being granted. As at June 30, 2016, none had been exercised.

BusinessDesk.co.nz

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