Mil­lion dol­lar club

The last month has seen Aus­tralia’s pub­licly listed travel com­pa­nies re­lease their an­nual re­ports, pro­vid­ing a glimpse into the de­tails of their op­er­a­tions – in­clud­ing the some­times lofty salary pack­ages of their key man­age­ment per­son­nel. In trav­el­bul­leti

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Skin in the game ap­pears to be the theme for this year’s travel in­dus­try Mil­lion Dol­lar Club. While a seven fig­ure base salary might be nice, not one of the travel agent mem­bers of the club reached the magic mil­lion-dol­lar mile­stone on their reg­u­lar in­come alone. In fact a key trade­mark of all the big earn­ers for 2015/16 was that they took home a sig­nif­i­cant chunk of their pay pack­ets in the form of div­i­dends. This year we have an­a­lysed the fig­ures based on in­dus­try sec­tor. Given the va­ri­ety of op­er­a­tors in the in­dus­try and what they do we thought it was prob­a­bly bet­ter to group sup­pli­ers such as air­lines and hote­liers sep­a­rately to those oc­cu­py­ing other parts of the dis­tri­bu­tion chain, such as travel agents.

Travel agents

Across all sec­tors the over­whelm­ing leader of the pack this year was Flight Cen­tre founder and man­ag­ing direc­tor Gra­ham ‘Skroo’ Turner. His to­tal re­mu­ner­a­tion amounted to a whop­ping $23.8 mil­lion – eas­ily eclips­ing all the other play­ers in­clud­ing the highly paid Qan­tas chief Alan Joyce and his ri­val at Vir­gin, John Borghetti, not to men­tion Air New Zealand CEO Christo­pher Luxon. In­ter­est­ingly, how­ever, look­ing at just reg­u­lar monthly in­come, Turner’s base salary of $380,000 was the low­est of ev­ery­one in the Mil­lion Dol­lar Club this year. He did re­ceive a $294,000 bonus which lifted his salary to $675,000 – but that was mere pocket change con­sid­er­ing the $1.52 per share in div­i­dends de­clared by Flight Cen­tre dur­ing the year. Turner holds more than 15 mil­lion Flight Cen­tre shares, mean­ing his div­i­dend cheques amounted to $23.1 mil­lion – a very tidy sum in any­one’s terms. Flight Cen­tre chief op­er­at­ing of­fi­cer Melanie Wa­ters-ryan made a re­turn to ‘The Club’ this year, with a share-based bonus worth more than half a mil­lion dol­lars, while her per­sonal 85,725 share stake in the com­pany boosted her in­come by over $130,000 mean­ing her to­tal in­come was more than $1.3 mil­lion for the year. Other Flight Cen­tre staffers in the 2016 Mil­lion Dol­lar Club in­clude Chris Galanty, ex­ec­u­tive gen­eral man­ager Europe and South Africa on $1.38 mil­lion and ex­ec­u­tive gm The Amer­i­cas Dean Smith, whose in­come was $1.24 mil­lion. On the topic of skin in the game, much has been made of the Hel­loworld merger with An­drew and Cinzia Burnes’ AOT group which took ef­fect from Fe­bru­ary this year. The mas­sive deal saw the Burnes’ def­i­nitely put their money where their mouth is, with the pair now hold­ing 40% of Hel­loworld. That gives them a strong in­cen­tive to pro­duce share price growth and div­i­dends – and had an im­me­di­ate back pocket ef­fect on other se­nior staff. As the Hel­loworld an­nual re­port del­i­cately put it, the Board has im­ple­mented changes to re­mu­ner­a­tion strat­egy. “One key fac­tor has been to right size the level of ex­ec­u­tive re­mu­ner­a­tion for an or­gan­i­sa­tion of our size,” the re­port said. That was re­flected in lower pay for An­drew Burnes as CEO and Cinzia Burnes as ex­ec­u­tive direc­tor, with both re­ceiv­ing just over $210,000 each since as­sum­ing their new roles in Fe­bru­ary. Hel­loworld also paid its first div­i­dend in some years, with a 2c per share pay­ment boost­ing the Burnes’ com­bined to­tal in­come by al­most $900,000 based on their 43 mil­lion shares. How­ever given they were only run­ning Hel­loworld for five months, that still wasn’t enough to put the pair into the Mil­lion Dol­lar Club this year. Hel­loworld’s new ex­ec­u­tive re­mu­ner­a­tion struc­ture looks to have par­tic­u­larly im­pacted the fu­ture base salary of the com­pany’s head of Air Tick­ets and QBT, Rus­sell Carstensen who this year took home $786,000 in­clud­ing a base salary of $550,000. The HLO an­nual re­port notes that “Rus­sell Carstensen’s base salary has been re­cal­i­brated… and will be $450,000 per an­num from 1 Septem­ber 2016”. Some­what eas­ing the pain would have been a $233,000 bonus he re­ceived for 2015/16 – a short term in­cen­tive awarded in 2015 but only paid

Rus­sell Carstensen’s base salary has been re­cal­i­brated... and will be $450,000 per an­num...

last year. Carstensen’s 84,000 share stake in Hel­loworld did boost his to­tal pack­age this year – but only by $1,685. Other big earn­ers at Hel­loworld in 2015/16 in­cluded former CEO El­iz­a­beth Gaines who took home $537,000 in­clud­ing a $187,000 bonus re­lat­ing to the suc­cess­ful com­ple­tion of the merger with AOT. Jenny Macdon­ald, Hel­loworld’s former chief fi­nan­cial of­fi­cer was paid $693,000 in­clud­ing bonuses to­talling $168,000. The com­pany noted its ex­ec­u­tive re­mu­ner­a­tion ex­penses are “an­tic­i­pated to be sub­stan­tially re­duced from 2016” both as the result of a smaller se­nior man­age­ment team and the salary re­align­ment. Cor­po­rate Travel Man­age­ment founder and CEO Jamie Ph­er­ous was an­other big earner this year, com­ing in be­hind Gra­ham Turner in sec­ond place in the travel agency Mil­lion Dol­lar Club. Ph­er­ous, who has presided over mas­sive growth at CTM, had a base salary of $459,000 plus a $250,000 bonus giv­ing him a take-home salary of just over $700,000. But again Ph­er­ous has a sig­nif­i­cant stake

in CTM – 21.5 mil­lion shares in fact, and the com­pany paid to­tal div­i­dends of 19c per share mean­ing he topped up his in­come by a cool $4.08 mil­lion, giv­ing him a to­tal pack­age of al­most $4.8 mil­lion. The com­pany’s global chief op­er­at­ing of­fi­cer Laura Ruf­fles also just scraped into the Club this year with a base salary of $516,000 a $300,000 bonus and other ex­tras tak­ing her pack­age to $997,000 – while her 127,000 shares earned an­other $24,000 on top mean­ing her to­tal in­come was $1.02 mil­lion. The other ma­jor Aus­tralian listed travel agency is We­b­jet, and CEO John Gus­cic was well and truly in the Mil­lion Dol­lar Club this year. Gus­cic had the high­est base salary among all of his listed travel agency CEO peers, with a fig­ure of $815,000. Dur­ing the year he was also paid bonuses and other add-ons which brought his to­tal pack­age to $1.56 mil­lion. But again he also has more than 1.1 mil­lion shares which re­ceived a 14.5c div­i­dend in to­tal, ad­ding an­other $160,000 to his in­come for the year and tak­ing it to just un­der $1.7 mil­lion. Ex­pect that to change sig­nif­i­cantly next year, af­ter the We­b­jet board im­ple­mented an ar­range­ment whereby the com­pany has pro­vided Guc­sic with a $1.5 mil­lion non-re­course loan to al­low him to ex­er­cise pre­vi­ously granted op­tions. “The loan was for the spe­cific pur­pose of as­sist­ing the Man­ag­ing Direc­tor to build and re­tain a pro­gres­sive eq­uity in­ter­est in the Com­pany and there­fore pro­vide a vi­tal com­po­nent of long term re­ten­tion and an align­ment of long term share­holder val­ues,” the We­b­jet an­nual re­port con­firms.

Air­lines

Much has been made in main­stream me­dia of Alan Joyce’s pay packet, which this year soared to more than $13 mil­lion. Much of the in­crease can be at­trib­uted to the car­rier’s trans­for­ma­tion which has in turn boosted the Qan­tas share price and saw it pay a div­i­dend for the first time in many years. Qan­tas also shared the spoils with many of its em­ploy­ees and it seems some­what churl­ish to be­grudge Joyce the fruits of his labour. He was the high­est paid air­line ex­ec­u­tive in the Mil­lion Dol­lar Club, with a base salary of $2.1 mil­lion, a very healthy $3.26 mil­lion bonus based on achiev­ing key per­for­mance in­di­ca­tors, and share-based pay­ments amount­ing to a fur­ther $7.6 mil­lion giv­ing

him a to­tal pack­age of $12.96 mil­lion. Again, Joyce has a not in­con­sid­er­able share­hold­ing in Qan­tas of 2.9 mil­lion shares, mean­ing the 7c per share div­i­dend net­ted him a fur­ther $209,000 bring­ing the CEO’S to­tal in­come from Qan­tas to $13.2 mil­lion. Other Qan­tas ex­ec­u­tives also did well, with chief fi­nan­cial of­fi­cer Tino La Spina, head of do­mes­tic An­drew David, head of In­ter­na­tional Gareth Evans, Loy­alty CEO Les­ley Grant and Jet­star chief Jayne Hrdlicka also all end­ing up firmly in the Mil­lion Dol­lar Club this year. Gareth Evans and Jayne Hrdlicka were the lead­ers of this pack with $4.3 mil­lion pack­ages, both sig­nif­i­cantly fat­tened by per­for­mance-based bonuses and in­cen­tives. Grant took home a to­tal of $2.8 mil­lion, fol­lowed by La Spina on $2.4 mil­lion and David on $2.37 mil­lion for the year. Again all these ex­ec­u­tives have share­hold­ings in the com­pany mean­ing the Qan­tas div­i­dend saw them top up their in­comes by amounts vary­ing from $7,000 (Hrdlicka) through to $40,000 (David). Air New Zealand is listed both in Aus­tralia and New Zealand, where the rules about dis­clo­sure of ex­ec­u­tive re­mu­ner­a­tion are slightly dif­fer­ent. CEO Christo­pher Luxon re­ceived a base salary of NZ$1.47 mil­lion plus a fur­ther $1.6 mil­lion bonus and other pay­ments which took his pack­age to NZ$4.7 mil­lion for the year. Again he has a con­sid­er­able Air New Zealand stake amount­ing to al­most 1.7 mil­lion shares mean­ing the car­rier’s healthy 45c per share saw this boosted by a fur­ther $754,000 tak­ing his in­come to NZ$5.47 mil­lion for the year. Luxon is the only se­nior Air NZ ex­ec­u­tive to have his pay­ments specif­i­cally iden­ti­fied, with the Air NZ re­port in­stead tab­u­lat­ing the other top earn­ers anony­mously. Within the car­rier there are seven New Zealand-based se­nior ex­ec­u­tives in the Mil­lion Dol­lar Club, with pay­ments rang­ing from NZ$2.2 mil­lion down to $1.04 mil­lion. It is not pos­si­ble to iden­tify who these are, but we can spec­u­late - the Air NZ cor­po­rate web­site iden­ti­fies the most se­nior roles as be­ing held by chief sales and com­mer­cial of­fi­cer Cam Wal­lace, chief fi­nan­cial of­fi­cer Rob Mcdon­ald, chief op­er­a­tions of­fi­cer Bruce Par­ton, chief flight op­er­a­tions and safety of­fi­cer Cap­tain David Mor­gan, chief mar­ket­ing and cus­tomer of­fi­cer Mike Tod and Stephen Jones, chief strat­egy, net­works and al­liances of­fi­cer. Fi­nally the other listed air­line with ex­ec­u­tives in the Mil­lion Dol­lar Club is of course Vir­gin Aus­tralia. The car­rier’s an­nual re­port, re­leased just be­fore this is­sue of trav­el­bul­letin went to print, in­di­cates CEO John Borghetti took home a healthy $2.86 mil­lion. It’s been a big year for Borghetti, and he well and truly earnt ev­ery penny of it as he man­aged a board in tran­si­tion, sig­nif­i­cant new share­hold­ers and the car­rier’s cap­i­tal re­struc­ture – but with Vir­gin Aus­tralia not declar­ing a div­i­dend last year he didn’t get any ad­di­tional in­come from his 1.9 mil­lion share stake in the air­line. There have also been sig­nif­i­cant changes in Vir­gin Aus­tralia’s se­nior ranks in re­cent weeks with the de­par­ture of Ju­dith Cromp­ton who took home $900,000 last year. Other Vir­gin Aus­tralia Mil­lion Dol­lar Club mem­bers in­clude Mer­ren Mcarthur, Group Ex­ec­u­tive re­gional and cargo whose pack­age was worth $1.04 mil­lion, chief op­er­at­ing of­fi­cer Gary Hammes (also de­part­ing) who earned $1.02 mil­lion and Tig­erair Aus­tralia chief Robert Sharp who took home $1.06 mil­lion.

Other listed travel com­pa­nies

The rest of our travel Mil­lion Dol­lar Club mem­bers come from a mixed bag of in­dus­try sup­pli­ers, in­clud­ing hote­liers, in­sur­ance com­pa­nies, trans­port op­er­a­tors and at­trac­tions. Top of the list was Jeff El­li­son, CEO of Sealink Travel Group who pre­sides over the com­pany’s port­fo­lio of Kan­ga­roo Is­land tour op­er­a­tions, Cap­tain Cook Cruises on Syd­ney Har­bour and other ferry ser­vices around the coun­try. El­li­son had a base salary of $469,000 topped up with bonuses and other pay­ments mean­ing his salary pack­age amount to $794,000 for the year. How­ever he also holds more than five mil­lion Sealink shares which each at­tracted a 12c div­i­dend in 2015/16, boost­ing his in­come to $1.46 mil­lion for the year. Mantra Group CEO Bob East was also in The Club, with a base salary of $612,000 and other pay­ments which took his pack­age to $1.3 mil­lion. On top of this his 1 mil­lion plus share­hold­ing net­ted a fur­ther $101,000 in div­i­dends so he came in with a to­tal of $1.43 mil­lion. Event Hos­pi­tal­ity, par­ent com­pany of Ry­dges Ho­tels and Re­sorts and NSW ski re­sort Thredbo, changed its name from Amal­ga­mated Hold­ings dur­ing the year, with CEO David Seargeant tak­ing home $5.6 mil­lion for the year as he over­saw the group’s di­verse port­fo­lio. Ry­dges md Nor­man Arun­del was just out­side the Mil­lion Dol­lar Club with a to­tal in­come of $938,000 for the year. Former Cover-more Travel In­sur­ance CEO Peter Ed­wards, who stepped aside in July, also just missed out on be­ing in ‘The Club’ with a to­tal pack­age in­clud­ing share div­i­dends of $981,000. Next year it will be in­trigu­ing to see whether Ju­dith Cromp­ton, who will next month join Cover-more to head up its Travel and Avi­a­tion divi­sion, will once again end up in the Mil­lion Dol­lar Club in 2017.

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