Woodside CEO Peter Coleman takes $1m pay cut

Peter Coleman’s 2016 pay has been trimmed following shareholder pressure and despite a rebound in profit.

Peter Coleman has taken a $1m pay cut following shareholder pressure.

Woodside Petroleum trimmed the hefty paycheck of chief executive Peter Coleman by around $1m in 2016 despite the company’s profits rebounding strongly as the oil price recovered.

The action was predicated on meetings with investors that left Woodside directors in no doubt the $US7.6 million ($10m) remuneration package Mr Coleman received in 2015 was perceived to be too high.

That issue had already been made abundantly clear in April last year when Woodside (WPL) received a “first strike” at its AGM as 27.59 per cent of votes were cast against the remuneration report.

A second strike would open the door for a board spill, but the directors are hoping a more than 10 per cent reduction in Mr Coleman’s pay to $US6.7m ($8.9m) will be enough to get investors on side at its next AGM on May 5.

The dip in his remuneration comes after the group saw its share price jump 8.5 per cent in 2016 and booked a sharp improvement in net profit from $US26m to $US868m.

The action comes as public consternation over executive pay packets continues to swell, with the heat in the issue best highlighted by the furore over the $5.6m salary outgoing Australia Post boss Ahmed Fahour received in fiscal 2016.

“(The first strike) result was a catalyst for a review of our executive remuneration arrangements by the board,” Woodside chairman Michael Chaney said.

“This year’s report demonstrates our commitment to responding to this feedback.”

Among the changes is a move from fair to face value for long-term award (LTA) allocations as well as a removal of the second Relative Total Shareholder Return test for LTA allocations.

For this year, the cash element of the CEO’s short-term award was cut from two-thirds to one-third, with the remaining two-thirds delivered in restricted shares.

Woodside also noted fixed remuneration had been left untouched, while the group introduced shareholding benchmarks for non-executive directors to ensure they had more skin in the game.

The latter development would better align director and shareholder interests in long-term performance, the company said.

“These changes reflect the commitment of the CEO, key management personnel and the board to addressing shareholder sentiment with a commensurate response,” Mr Chaney said.

“I believe that the improvements in remuneration structures and their presentation here are an appropriate response to feedback, and I trust shareholders will be satisfied with the resolutions we’ve reached.

“We are consulting further regarding the scope for a broader redesign of our executive remuneration.”