B&b Chief Nets $22m In Tough Year
Sydney Morning Herald
Friday April 18, 2008
THERE was no credit crisis when determining the pay packet of Babcock & Brown's chief executive, Phil Green, for 2007, with the beleaguered boss landing $22.1 million in cash and shares.
Mr Green's pay deal, outlined in yesterday's annual report, puts him among the best paid chief executives in Australia, second only to Macquarie Group's chief executive Allan Moss, who was paid $33.5 million last year. Mr Green earned 66 times more than the Prime Minister's salary of $336,000 and more than 400 times the average wage of $55,000. His pay deal comes after a difficult year for Babcock & Brown shareholders, who have seen its share price plummet from a high of $34.63 in June to yesterday's close of $13.12.While the company has achieved strong profit growth, posting a 58 per cent increase in net profit for the year ended December 31, investors are sitting on a 54 per cent decline in their share price in the past year. Since the credit crisis emerged last year the market has taken fright at stocks perceived to have too much debt.And there have been fundamental questions raised about the business model used by Babcock & Brown: selling funds to investors, then taking management and performance fees. In response, Mr Green and senior managers are facing a larger slice of their salary tied to share-price performance.About $8.7 million of the chief executive's 2007 pay is made up of shares, and another $6.4 million in share-related payments that may become available in future. In a tough start to 2008, he has argued his company has been aggressively sold down by short sellers, including hedge funds that profit when companies' shares decline in value. Babcock & Brown has been forced to take strong defensive action, including refinancing a $631 million margin loan it held in its satellite funds, cutting its debt and removing lenders' ability to make a "call" on the loan. It has also secured more debt and raised $220 million in equity. Additionally, it has propped up the faltering stockbroker Tricom, injecting cash to help ease pressure on about $70 million in Babcock & Brown satellite shares held through Tricom loans. The 1435 staff at Babcock & Brown shared in the pay bonanza, which totalled $887.9 million, or an average salary of about $620,000. But the riches are dominated by key executives including, Peter Hofbauer on $19.9 million, up 36 per cent on the previous year; US-based Steven Zissis on $17.1 million, up 57 per cent; and Tokyo-based Eric Lucas on $15.6 million, up 5 per cent. In keeping with the remuneration practices of investment banks, 44 cents in every dollar earned by the bank went towards staff payments.The annual report also speaks to the growing diversity of Babcock & Brown, showing it managing assets of $72 billion in funds across the world, including the fund BBAir, which listed on the New York Stock Exchange in September.
© 2008 Sydney Morning Herald
