Shareholders grill Treasury chairman over CEO pay and Chinese trade war

THE owner of the flagship Penfolds wine brand has been forced to defend its chief executive’s $17.6 million salary during annual meetings in both Hong Kong and Australia.

TREASURY Wines Estates has been forced to defend its chief executive’s $17.6 million pay and perks package as it continues to hitch future earnings to Chinese wine sales.

At the group’s annual meeting on Thursday, chair Paul Rayner was also questioned by shareholders about the company’s financial risk from climate change, its reliance on China for growth, the problems it has had with counterfeit wine there, and the US-China trade stoush.

The meeting was split between Hong Kong, where the board and senior managers met shareholders, and Melbourne, where other senior managers fronted up.

TREASURY TAKING PENFOLDS FROM CHAMPAGNE TO CHINA

WINE EXPORTS GROWING AT FASTEST RATE IN 15 YEARS

TREASURY HIT BY CHINESE RED TAPE, ‘SOUR GRAPES’

Mr Rayner was asked by the Australian Shareholders’ Association why the company, which is best known for brands including Penfolds and Wolf Blass, excluded from its annual report a table showing executives’ take-home pay.

Treasury Wine Estates chief executive Michael Clarke. Picture: David Geraghty

There was enough information in the report, Mr Rayner replied, and he had no plans to include it in the future.

The ASA said it had calculated the value of chief executive Michael Clarke’s pay and perks package at $17.6 million for the year to June — up from $15.4 million the previous year.

This was 214 times the average Australian take-home pay and among the highest in Australia, the association’s representative said.

Mr Rayner replied: “What is also high is the total shareholder return the company has returned in the last three years — 260 per cent, which I’d say is stratospheric”.

“This high level of pay is commensurate with extremely high shareholder returns,” he said. Mr Rayner also said the board had not formally supported the Paris climate agreement but added “I can say that, personally, I do”.

Climate risk was constantly monitored, he said, including the company’s long-term strategy of diversifying its wine sources across the world to limit fallout from weather ­impacts in any single region.

Treasury owns some of Australia’s most internationally recognised labels, including the flagship Penfolds Grange.

When questioned about a reliance on China for growth, Mr Rayner said it was “not a coincidence — that’s why the board is here (in Hong Kong)”.

Treasury was now the number one wine importer to China, he said.

“China is a very important market for this company but I’d just make the point that all our regions of the world are doing well. All increased profitability during the year,” he said.

“As for the trade war, we continue to support our brands coming out of America but we are beginning to source products out of other markets to come in to China as well.”

However, Mr Rayner also said that in China, the company was paying the extra tariff imposed by China on US-sourced wine. Counterfeit wine, bottles and labels were still a problem in the Asian market, he said, but the company was working on the issue.

[e-mail]