Brambles Industries has ceded to concerns over excessive executive pay by cutting the contractual pay-off to its chief executive to one year's salary. But the pallets group will still give him a A$1.5m (£608,000) leaving gift if he gives the Anglo-Australian company a year's notice of his intention to depart.
Sir CK (Chung Kong) Chow, the chief executive, was employed on a two-year contract that would have entitled him to a A$6.2m payout if he had been made to resign. But the board said "developments in the corporate governance area in relation to executive directors' notice periods" had led it to reduce his contract to one year's notice.
Corporate governance lobbyists welcomed the move to lower his contract period, but said the cash reward for giving additional notice was highly unusual. David Summerlink of Pirc said: "It is very difficult to see whether there is an actual reduction in the potential payout from lowering his notice period."
While the company is required to pay off Sir CK with a year's salary if they want him to leave, Sir CK is only required to give six months' notice.
But Brambles said it "considers it desirable to have ... more than six months to plan for an orderly succession if Sir CK should decide to leave". So, it will give him a severance payment worth half his pay package, as well as half his average bonus from the previous three years if he gives 12 months' notice. This would be worth A$1.5m, based on last year's salary and bonus.Reuse content