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Tom Degnan, the man who brought Burns Philp back from the brink of
collapse, has negotiated a $5 million golden parachute should control of the
food group change hands.
The pay deal comes as debate intensifies on whether Burns Philp is about to
become a takeover target as major shareholder Graeme Hart weighs up whether to
exercise options and invest another $250 million in the company. But recent
speculation has it that the New Zealand businessman is actually keen to retain
his 57 per cent stake in Burns Philp, rather than sell out ahead of the options
expiry.
Mr Degnan's payout, part of a new remuneration package negotiated when he
relocated to the US in January, is triggered if Mr Hart cedes control of Burns
Philp. Under the deal he's entitled to a lump sum equal to twice his annual base
salary, maximum bonus and car allowance. Based on last year's annual report,
the lump sum would be worth at least $5million.
The Burns Philp annual report shows managing director Mr Degnan earned nearly
$3.9 million in 2001-02, comprising base salary, incentives, non-cash benefits
and superannuation. He grossed $3 million the previous year.
Major investors had no problems with Mr Degnan's pay packet. They said that
Mr Degnan and Mr Hart were responsible for restoring Burns Philp's financial
health after the company was brought near to collapse in 1997 by a mountain of
debt.
However, there was still some uncertainty about Mr Degnan's agreed payout
should Mr Hart cease to have control over the company.
``When Degnan started running this company it was on its knees," said Matt
Williams, a portfolio manager at Perpetual Funds Management. ``He's done a
fantastic job of turning it around and he deserves to be handsomely rewarded.
``Whether this pay agreement goes beyond that, at this stage I don't know,"
Mr Williams said.
Net profit in the year to June 30, 2002, jumped 65 per cent to $146.2
million.Woolworths chief executive Roger Corbett was handed a big pay increase
for 2001-02 after steering the retailer to a 22 per cent rise in annual net
profit to $523.2 million. His remuneration totalled $3.3 million, up from $1.8
million a year ago.
Supermarkets director Bill Wavish, the man considered most likely to take
over when Mr Corbett retires, enjoyed a pay packet of almost $1.4 million, up
from $1.1 million.
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