Telstra chair compares $5m salary to kids earning money playing Fortnite

The major telco’s chairman launched into an extraordinary defence of CEO payments, comparing them with computer gamers and influencers.

The Telstra chairman launched into an extraordinary defence of the millions of dollars paid to executives at the telco and other Australia companies, saying Instagram influencers and computer gamers pocket a similar amount.

Last year Telstra was one of many publicly listed companies to come under the spotlight of excessive bonuses paid to executives, with shareholders rejecting its remuneration report.

But on Tuesday the major telco avoided a second strike on payments despite chief executive Andy Penn pocketing $5 million for the year.

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During the AGM, chairman John Mullen vented his frustration at the backlash, saying he struggles to understand why the business community is singled out over the cash splash.

The chairman’s comments come after a Melbourne teen won $4.6 million in August at a Dota 2 esports gaming event.

“Young kids can earn $US5 million now by playing Fortnite. And even influencers — you can earn millions of dollars just by wearing a nice jacket and standing in front of a landmark,” Mr Mullen said.

“And yet when a business executive devotes a huge portion of their life — they work long, long hours, weekends, they miss family events — when they get to the top of their profession, it is somehow morally wrong that they get rewarded for it in an international global market.”

Mr Mullen said the board was forced to strike a delicate balance between satisfying shareholders but also incentivising management and attracting world-class leaders to the company.

“Overseas and Australian executives will simply not leave well-paid jobs elsewhere to join Telstra unless we have competitive remuneration strategies,” Mr Mullen said.

The Australian Council of Trade Unions (ACTU) secretary Sally McManus slammed the defence of the pay, tweeting business executives “live in another world to us”.

“Extreme wealth from obscene bonuses seems to make them totally blind to inequality and the lives of everyone else,” she said.

ACTU secretary Sally McManus says business executives ‘live in another world to us’. Picture: AAP Image/Daniel Pockett

Mr Penn’s $5 million — $2.4 million in base pay and $2.6 in variable pay — was up from $3.8 million in 2018 but down 20 per cent from the $6.7 million he received in 2016.

Although the payment structure was overwhelmingly approved this time around, senior union official John Ellery said the remuneration was an offence to the telco’s unionised employees who were asked to accept “a paltry, ludicrous pay raise”.

“Again, we say, absolutely outrageous, ludicrous, and you should stop this nonsense,” Mr Ellery said.

RBA BOSS BLASTS CEO SALARIES

The RBA governor slammed the extraordinary salaries of Australia’s CEOs last month after it was revealed Qantas boss Alan Joyce pocketed a staggering $24 million last year.

Central bank boss Philip Lowe compared the absurd bonuses among the business community’s elite with the stagnant wage growth of regular Australians, which he said should be raised by more than 3 per cent.

“As a regular Australian, it disturbs me,” he said during his speech to the Armidale Chamber of Commerce.

“Some people who are paid extraordinarily high amounts of money and working Australians have relatively low wages and getting small wage increases, I think it’s an issue for society.”

Dr Lower pockets a base salary of $903,000 and said he rejected the chance of a performance-based salary structure.

He said CEOs shouldn’t be rewarded with an incentive for doing their job.

“I’ve got a flat salary and I say to my board, ‘Look, don’t consider performance because you know I’m going to work as hard for you and for the people who show up regardless’. Actually, I think a lot of people are like that,” the RBA boss said.

“I don’t need the incentives. My incentive is to do a good job for the people.”

Mr Joyce’s $23,876,351 wage was the most of any CEO in the 2018 financial year, according to analysis from the Australian Council of Superannuation Investors (ACSI).

The median pay enjoyed by ASX 100 CEOs was $4.5 million — a far cry from the country’s average full-time wage, which the Australian Bureau of Statistics places at $85,010.

Qantas CEO Alan Joyce took home a staggering $24 million last year. Picture: David Swift.

“There is a mindset that says we have to pay you five or 10 or $20 million so that you deliver value for the company. But that’s the mindset that many businesses have,” Dr Lowe said.

He said regular Australians would struggle to comprehend these staggering figures and called for the broader workforce to have “wage increases that start with a three (per cent)”.

The release of the wages prompted ACSI CEO Louise Davidson to slam the country’s “culture of entitlement” among CEOs.

“The way bonuses are being handed out suggests there is a culture of entitlement whereby supposedly ‘at-risk’ pay is not very risky at all,” she said, according to a release.

“These payments occurred in a year when the royal commission was in full swing, revealing evidence that executives were not being held accountable for poor conduct, and in the wake of soaring ‘first strike’ votes against remuneration reports.

“Clearly, corporate Australia is not getting the message that bonus payments should be variable and awarded for stretch performance rather than being fixed pay under another name. This is a failure of both discipline and leadership.”

— with AAP

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