Hywood payout $6.3m and rising

His future’s unclear but after years of executing a brutal cost-cutting regime, Fairfax boss Greg Hywood will exit with millions.

Greg Hywood arrives at the Star Casino. Picture: James Croucher

After years of executing a brutal cost-cutting regime, Fairfax chief executive Greg Hywood yesterday announced his own redundancy, with the former journalist expected to walk out the door of the 177-year-old media group with a payout conservatively valued at more than $6.3 million.

But the ultimate value of his exit package could swell by millions more once a swag of 9.3 million options to buy shares in the newspaper empire is crystallised by Fairfax’s probable $4.2 billion merger with the Peter Costello-chaired Nine Entertainment Group.

Yesterday Mr Hywood, a ­reporter turned executive who has been at the helm of Fairfax since 2010, said his future with the merged company was unclear. But it is expected the 63-year-old will not endure in an executive capacity once the deal is done.

“The shoe’s on the other foot; I’m here announcing my own redundancy for a change,” said Mr Hywood, who has in recent years presided over a harsh regime of cost-cutting at Fairfax.

The irony was not lost on the hundreds of journalists employed in Fairfax newsrooms across the country at prestigious mastheads that include The Australian Financial Review, The Sydney Morning Herald and The Age.

Nine chief executive Hugh Marks said yesterday a merger of the two media empires was expected to generate cost savings of $50m during its first two years.

The Maserati-driving Mr Hywood owns about 2 million Fairfax shares outright, which at an effective deal price of 93c are worth $1.86m.

He also holds 3.14 million performance rights that under the terms of the merger will convert to ordinary shares or be paid out in cash. These are worth $2.92m.

Under his contract of employment, Mr Hywood is also entitled to a 12-month notice period from the company if his role is terminated. In lieu of this notice, he can be paid one year’s fixed pay, which is $1.575m.

Given Mr Hywood effectively will be made redundant, with Mr Marks to run the combined group, this amount will be taxed at a lower tax rate as an eligible termination payment.

All up, that’s $6.35 million.

It is unclear whether Mr Hywood, who at the end of last year hived off Fairfax’s growth-engine real estate group Domain as a separate listed entity, will be offered a seat on the board of the newly merged Nine-Fairfax.

He said yesterday he had not discussed his future with executives at Nine after the merger.

Mr Hywood, whose career has included stints as editor and publisher of the AFR and The Age, has already accumulated significant personal wealth from his time as one of Australia’s leading media executives.

He owns his home in Melbourne’s leafy East Malvern — near that of Minister for Revenue Kelly O’Dwyer — for which he paid about $1m in 2002 but which is now worth closer to $4m.

Then in 2016 he bought a luxury apartment overlooking Sydney’s Hyde Park at a cost of $4.1m. He bought the home off market from then consultant to Fairfax Patrick Allaway, who went on to join the Fairfax board as a director.

The Nine merger will also see Hywood crystallise the value of 9.3 million options to buy Fairfax shares that he also holds. The options, which are difficult to value, have an equivalent share value of about $8.6 million at Nine’s offer. However, they would cost Mr Hywood a varying amount to exercise depending on when they were issued. That exercise price per share would be deducted from their ordinary value to derive a value for the soon-to-be-former chief executive.