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Filed under: Big Business, Bonus, Marius Kloppers, Profit, Shareholders

43 comments

You can bet your bottom dollar that Paul Zahra and Alan Joyce are sending each other bitchy emails about Marius Kloppers this week. The BHP Billiton chief surrendered his bonuses this year after the company wrote down the value of its US shale and gas interests by $2.7 billion.

Kloppers demonstrating how big the safe is that he keeps his cash bonus in. Photo: Perth Now

It’s an annoyingly good natured precedent for a big business executive. Although the fact that Kloppers’ bonus last year was around $4.7 million kind of takes the shine off it.

Even still, Zahra and Joyce are probably cursing him for putting them under the spotlight and it’s a decision they’ll be under some pressure to emulate this year with both companies also reporting significant profit slides.

And they’re not alone, according to news.com.au, 40 of the top 200 ASX-listed companies have warned over the past year profits were sliding or would fall short of earlier forecasts.

To the ordinary person, the decision to forefeit a big, fat bonus would be a bit of a no-brainer. After all, it’d be harder to enjoy sipping champagne on the new luxury yacht when you know you haven’t made budget this year. Wouldn’t it?

And what about keeping the shareholders happy? Australian Shareholders’ Association chief Vas Kolesnikoff told news.com.au that executive pay was “out of control”:

“Workers don’t get a bonus for turning up. It has become pervasive that bosses get a bonus just for maintaining earnings - that’s their base job,” he said.

Damn straight, Mr Kolesnikoff. Especially when you consider that the average bonus for big time executives here in Australia falls between $1-2 million.

Yep, insert your own phwoar noises here.

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43 comments

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- Achmed says:
  
  07:25pm | 08/08/12
  
  Someone mentioned actors getting millions to run around yelling “I’m Batman”, add to them the sportsmen and women who get paid millions without making a real contribution to socirty while nurses, child care workers and the like struggle to make ends meet. It is a poor reflection on our society. Perhaps instead of sponsoring a sport or sportsman the big companies could sponsor a hospital or the like
  
  Reply
- alan says:
  
  01:43pm | 08/08/12
  
  how the bloody hell did JOYCE GET THE QANTAS JOB,I WILL NEVER KNOW.forged papers maybe.there is nothong between him and his employee,s,there is no communication at all,the gap is so wide and getting wider. regarding his bonus,he,s just not worth his high salary.let alone a bonus.
  
  Reply
- cityboy says:
  
  10:41am | 08/08/12
  
  Well they are BONUSES after all! If they have come to be a sort of variable feast component of annual base pay/salary, then they need to say so. No company performance = no bonus, no?
  
  Reply
- Leningen says:
  
  10:03pm | 07/08/12
  
  Snake oil. They sell it.
  They can not possibly have enough experience or work enough hours or even be lucky enough to be worth that sort of money. I once read that the main reason for paying a CEO that sort of money was so that he wouldn’t sell the company to someone who would pay him that sort of money. Put a pirate in charge and what do you expect?
  I’m sorry, but these are not dynamic supermen, they are hereditary leeches.
  
  Reply
- nihonin says:
  
  04:51pm | 07/08/12
  
  Bastards have more money than I ever will, bitch, moan, whinge, grumble…........
  
  Reply
- M says:
  
  04:46pm | 07/08/12
  
  All hail the free market economy!
  
  Reply
- stephen says:
  
  04:39pm | 07/08/12
  
  Marius Kloppers is already mothballing projects for fear that the European monetary problems will get worse.
  These big shareholder-owned companies panic too early, and they are in fact the cause of the problem.
  I hope he mothballs himself.
  
  Reply
- Phillip says:
  
  03:06pm | 07/08/12
  
  BHP CEO is considered by many in the USA to be the most powerful businessman on the planet- every decision he makes affects just about every person on our good Earth. Leading movie actors (who earn much more than Kloppers for trivial pursuits) by contrast have minimal affect. Kloppers style does not appeal to me but his impact on BHP bottom line is what I judge him on. If he fails there he will be gone. Until then all the best Marius!
  
  Reply
Phillip says:

07:48am | 08/08/12

I would rather hang out with Arnie or George Clooney or,even better, Charlize Theron than puritanical Marius but my lifestyle depends on my BHP shares!!
Chris L says:

05:54pm | 07/08/12

No way Phil! Arnie alone must have saved the world a dozen times over by now!
- Borderer says:
  
  02:42pm | 07/08/12
  
  I love the attitude this whole topic creates as people talk about value for money.
  First fact is that an executive will only get what the market is willing to pay for them, there is no union to negotiate on their behalf.
  CEO’s are only as good as their last quarter, job security is non-existant if the shareholders don’t have faith in you.
  Most importantly you work 24 hours a day, 7 days a week, these businesses aren’t a local family tyre shop but multi nationals, you are on call all the time. I never really thought too much about this until I started considering progression to senior management (a tier below these guys), the weekends, 12 hour days on average, the not seeing my daughter grow up because I’m at work all the time, dealing with clients etc and I have to weigh up if I really want all that.
  Sure, compare pay days and you’ll find inequity, compare homelife and health and you’ll find it too. I don’t feel sorry for them, it’s all a sacrifice they are willing to make and shareholders are willing to pay for. If they are managers of listed companies, the shareholders have the only opinions that matter, governments are a differnet entirely.
  
  Reply
- bananabender says:
  
  02:35pm | 07/08/12
  
  Koppers is probably the worst CEO in BHPs history - probably more than $30 billion blown by his incompetence He attempted a failed merger with Rio, another failed attempt to buy Potash of Canada, wasted $15billion buying Petrohawk etc, etc.
  
  Reply
Phillip says:

07:54am | 08/08/12

Don’t judge when youare obviously not in possession of all the facts. Those particular decisions came from the Board not from Marius.As CEO he was tasked to execute the best deal. BHP boards have never been strong. They have thrived because of tough CEOs. If Kloppers is to be criticised it is because he is allowing the Board to dominate him. Probably as throwback to his military background where following orders from above are the desired performance benchmark.
- jimbo says:
  
  02:25pm | 07/08/12
  
  If you think about it you will realise that a half witted actor can earn a ton more than a CEO of a muli-national company by running around yelling “I am Batman”, or whatever. Now, who really earns it?
  We can’t all be rich so just accept what life has to offer and be content with what YOU have.
  
  Reply
Mike says:

08:28pm | 07/08/12

Too right. While others are moaning about not being rich, some of us are buying shares in the best companies and making a ton of money…and loving it.

And no, I’m not going to say which ones, but the haters will try and point out (given their limited financial literacy) that “property is best” or that “shares have gone nowhere in five years”...depends which ones !
- John Stuart Mill says:
  
  01:48pm | 07/08/12
  
  When I emigrated to Australia 38 years ago my first boss told me one of the major differences in the work environment between England and Australia was that in England a greedy managing director would earn about ten times as much as his average employee, while in Australia it was just six times as much. Happy days. The obscene, unjustified and unjustifiable growth in executive remuneration over the past two decades, presided over by incompetent and politically corrupt governments and toothless regulatory authorities, has been a criminal conspiracy between boards and executives, conspiring to steal from shareholders and employees alike. The trickle down effect of this criminal conspiracy has seen our taxes wasted on very average public servants earning half a million a year, with a commensurate flow on to other equally average senior executive ranks, and the bottom line of the whole thing is that this once moderately egalitarian nation has become one increasingly and sadly divided into haves and have nots. I embraced and adored this country when I came to these shores - more and more, I am now beginning to despise it as one of the most uncivilised, crass and uncaring communities on the planet.
  
  Reply
chuck says:

09:30am | 08/08/12

I expect JT is just an apologist for this era of individual greed without responsibility and is no better than a 5th columnist !

It may well be that proponents of “greed is good” are indeed trying to ferment a cultural/economic divide sufficient to create a huge social ruction?
John Stuart Mill says:

03:50pm | 07/08/12

JT - it’s pretty typical of Australians, MATE, to shoot the messenger, and your Grand Canyon and FO comments were neither original nor unexpected. But then, what does one expect from a correspondent who clearly thinks the worship of manna epitomises the height of civilisation? I believe it can be cogently argued that Australia has not improved as a nation over the past four decades by any number of measures of civilised society, but I would be more than happy to listen to the other side of the debate. Having said that, a counter argument, MATE, is a little higher on the intellectual scale than moronic cliches and insults - so come up with something a little more intelligent next time. Mate.
JT says:

02:17pm | 07/08/12

Criminal conspiracy? JHC mate, that chip on your shoulder is large enough to swallow the Grand Canyon.

‘‘I am now beginning to despise it as one of the most uncivilised, crass and uncaring communities on the planet.’‘

So FO, I’m sure plenty would be happy to see you go.
- George says:
  
  01:45pm | 07/08/12
  
  Bean counters are the best people in the whole world and the rest of you are all scum. So stfu and be content with your stations in life whilst they work out ways to take more off you.
  
  Reply
- Shane from Melbourne says:
  
  01:35pm | 07/08/12
  
  Now let us see if Gillard and her cronies do the same with their pay and massive pensions. these guys have done nothing significant for this country are we going to let them get away with it?
  
  Reply
Andrew K says:

03:56pm | 07/08/12

@ vox: Gillard is the PM not doing her job! How many boats in the last 48 hours alone? If the actual leader can’t get the job done after all these years that my dear is the defination of pathetic
vox says:

02:35pm | 07/08/12

Shane, why do you comment about Gillard but not about Abbott? Like it or not Gillard is the P.M., and her crowd govern the Nation.
When someone, (many “someones”) ask for policy you idiots scream, “He doesn’t have to have policy, he’s not governing”, but you forget to mention what he is doing.
Question. “What does Abbott do for his obscene salary and perks?”
Your answer, “Bugger all, he doesn’t have to”.
See how juvenile, how utterly immature you guys are? Not just you, but all of the morons who promote that viewpoint.
Do you insist that Abbott and Hockey, and Bishop and the rest of the minor-Party Liberals surrender their perks given that they, (according to them and your idiotic co-non-thinkers), don’t do anything.
See? Their defence against being policy-free is the same as the one you raise, nitwit.
“We’re in Opposition, so there!” Pathetic.
vox says:

02:35pm | 07/08/12

Shane, why do you comment about Gillard but not about Abbott? Like it or not Gillard is the P.M., and her crowd govern the Nation.
When someone, (many “someones”) ask for policy you idiots scream, “He doesn’t have to have policy, he’s not governing”, but you forget to mention what he is doing.
Question. “What does Abbott do for his obscene salary and perks?”
Your answer, “Bugger all, he doesn’t have to”.
See how juvenile, how utterly immature you guys are? Not just you, but all of the morons who promote that viewpoint.
Do you insist that Abbott and Hockey, and Bishop and the rest of the minor-Party Liberals surrender their perks given that they, (according to them and your idiotic co-non-thinkers), don’t do anything.
See? Their defence against being policy-free is the same as the one you raise, nitwit.
“We’re in Opposition, so there!” Pathetic.
Sal Zoney says:

01:49pm | 07/08/12

Right on Shane! Gillard doesn’t deserve that $600, 000 year for life pension with perks! Royal Commission anyone?
- Hey little sister says:
  
  01:19pm | 07/08/12
  
  We have exchanged one queen for a thousand queens.
  
  Reply
- TimR` says:
  
  01:16pm | 07/08/12
  
  Marius is worth every penny. Digging rocks out of the ground and putting them on a boat isn’t as simple as it sounds you know. You have to get them to the boat.
  
  Reply
sunny says:

08:55am | 08/08/12

and they’re really heavy
- Gordon says:
  
  01:15pm | 07/08/12
  
  Wouldn’t it be better to bag some fatcat who is refusing to give up his bonus instead of the one who volunteers to?
  
  Reply
- Michael S says:
  
  01:12pm | 07/08/12
  
  At an average salary for a normal person of $60,000; 33 ordinary workers would not have been made redundant if not for a $2m executive bonus.
  
  Reply
- Matt says:
  
  01:12pm | 07/08/12
  
  Lucy I’m assuming you meant “Joyce” not “Jones”.
  
  I’d be happy enough for Joyce to get his bonus this year because he’s done a decent amount to try and turn around the international arm of Qantas which has been “flailing” for a while. Hopefully some of the measures work but no-one can say that he’s not been trying.
  
  Kloppers, on the other hand, appears to epitomise the type of arrogance that comes out of BHP. A write-down of $2.7bn on a recent acquisition is just crazy town.
  
  @John Lawrence, mate what executives take on as part of their function that you presumably don’t, is a tremendous amount of responsibility and risk and that is reflected in their base pay. Their bonus will be based on metrics set by the company that hired them. If they achieve those metrics because the company wasn’t smart enough to develop decent metrics then that’s the company’s issue.
  
  Mind you, none of this is an issue for the great unwashed of the Australian public who don’t own shares to get involved in. If you own shares in a particular company concerned, then feel free to state your opinion. If you’re just angry that you’re not getting the same money, however, keep your mouth shut.
  
  Reply
PhilD says:

10:48am | 08/08/12

@ jase ...“because they are taking on more than 100x the responsibility.”

What a lot of crock. So, if the company loses a billion dollars in a year, the CEO is responsible and should pay for it by your definition. After all, if a worker breaks something it can come out of his or her wages.
Most CEOs delegate their responsibility. Some set visions and goals and delegate responsibility for the achievement of the vision and goals.
Now, how much of his $11M salary and bonus a year did Sol Trujillo really earn by losing billions from Telstra’s share value.

What places you in a position to judge how much more a boss should get than their workers?
ProfoundBS says:

10:41am | 08/08/12

@ Jase: Where have you been living the last few years? .“because they are taking on 100x the responsibility”. That is the whole point. They are NOT taking that responsibility. Even if the company records negative profits, the CEO’s still get their bonuses. These people - esp those in the financial sector - are all about “individual responsibility”. Yet as soon as the proverbial hits the fan, where is the responsibility then? Not on them that’s for sure.
John Lawrence ex 3RAR ( vietnam veteran) says:

10:36am | 08/08/12

@ Matt, my comment was made tongue in cheek. If i was paid a million i was only meaning i could live on it. There’s no need to tell me to shut my mouth.
jase says:

09:22pm | 07/08/12

PhilD, what places you in a position to judge how much more a boss should get than their workers?

CEO’s are well worth 100x what your average employee earns, because they are taking on more than 100x the responsibility. Australia seriously needs to get over this tall poppy syndrome that is holding us all back.
PhilD says:

07:15pm | 07/08/12

@Matt - but it is an issue for the workers of those companies if they are wrung dry. A worker who comes up with an innovation to improve quality, output, or production may get a small bonus as a reward. If demand falls off they get laid off.

The CEO’s and CFO’s drive for their own riches becomes a problem when these guys get to set and control their own incomes by being members of several company boards. Of course the Bourbons, Stuarts, and Romanovs deserved all their wealth and their great unwashed public deserved to starve. No boss deserves year in year out to earn 100 times the pay of their workers unless they own the company.
- John Lawrence ex 3RAR ( vietnam veteran) says:
  
  12:45pm | 07/08/12
  
  Nobody is worth the amount of money these greedy ppl get. I mean give me a million and it would last me a lifetime.
  
  Reply
cityboy says:

10:59am | 08/08/12

Sadly, you are right JT, and also wrong!
These bloodsuckers, directors, CEO’s et al are in cahoots to increase their take each year in an everincreasing upwards spiral to outdo their peers. As there are big ‘institutional investors’ with huge swags of shares on the big companies share registers who will always outvote the small individual investors who do actually say no to the #1 item on every company’s AGM agenda, on occassion. (These guys afterall have an eye on a plushy seat on one board or another when they tire of playing with our super money. Don’t want to upset the incumbant good ol’ boys, no sireee….)
So you see JT, it’s nothing whatever to do with what they are actually worth. The words of Dicky Warburton still ring in my ears after all that time: “We are worth every penny we are paid!” Yeah, course you are Tricky! pffft….
cityboy says:

10:58am | 08/08/12

Sadly, you are right JT, and also wrong!
These bloodsuckers, directors, CEO’s et al are in cahoots to increase their take each year in an everincreasing upwards spiral to outdo their peers. As there are big ‘institutional investors’ with huge swags of shares on the big companies share registers who will always outvote the small individual investors who do actually say no to the #1 item on every company’s AGM agenda, on occassion. (These guys afterall have an eye on a plushy seat on one board or another when they tire of playing with our super money. Don’t want to upset the incumbant good ol’ boys, no sireee….)
So you see JT, it’s nothing whatever to do with what they are actually worth. The words of Dicky Warburton still ring in my ears after all that time: “We are worth every penny we are paid!” Yeah, course you are Tricky! pffft….
Chris L says:

05:48pm | 07/08/12

I think people are mistaking John’s post to mean he wants someone to give him a million dollars. It seemed more, to me, that he was saying there is no need for the multi-millions being tossed to CEOs just as bonuses for doing their jobs.
Expat Ozzie says:

03:38pm | 07/08/12

JT: “These people are worth what the company and/or shareholders wishes to pay them.”

No their not. Their worth the amount their contract lawyers can negotiate for them. The shareholders rarely get much of a say in the matter.
Tombowler says:

01:32pm | 07/08/12

...and who ought to give you this million? Who else ought to get a million one-off payment? All veterans? What about rape victims? What about the disabled? What about the homeless? What about poor children?

Where do these ex gratia payments come from?

Nope. Gonna have to work for that mil, fella
Having said that, I thank you for your service in ‘nam…
JT says:

01:05pm | 07/08/12

Judging from your attitude a million would probably last you less than a year.

These people are worth what the company and/or shareholders wishes to pay them.

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Achmed says:

alan says:

cityboy says:

Leningen says:

nihonin says:

M says:

stephen says:

Phillip says:

Phillip says:

Chris L says:

Borderer says:

bananabender says:

Phillip says:

jimbo says:

Mike says:

John Stuart Mill says:

chuck says:

John Stuart Mill says:

JT says:

George says:

Shane from Melbourne says:

Andrew K says:

vox says:

vox says:

Sal Zoney says:

Hey little sister says:

TimR` says:

sunny says:

Gordon says:

Michael S says:

Matt says:

PhilD says:

ProfoundBS says:

John Lawrence ex 3RAR ( vietnam veteran) says:

jase says:

PhilD says:

John Lawrence ex 3RAR ( vietnam veteran) says:

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