It’s not just the Commonwealth Bank where the amount paid to the CEO and senior managers in 2009-10 has raised eyebrows; faltering insurer, Insurance Group Australia found reasons to pay its senior managers more in the year to June, despite suffering a big fall in earnings and more losses on the unfortunate UK play.
CBA CEO, Ralph Norris received a 75% boost in total income to $16.1 million and his 10 senior managers shared in a $23 million remuneration pool that was up on a year ago.
Much of the increase for Mr Norris came from long term incentives and that seems to have been the case at IAG.
The CBA boosted profit 42% in the 2010 financial year, and that was mostly down to a sharp fall in bad debt provisions and write-offs as the economy improved.
IAG’s annual financial report issued yesterday and annual review reveal that CEO Mike Wilkins received an 11% rise in total earnings for the year, despite net profit slumping to just $91 million from $181 million in 2009.
Mr Wilkins received a total package of $4.27 million.
Much of the increase was due to some $1.3 million worth of share-based payments that were issued as part of a long term incentive program.
They more than offset a lower short term bonus for Mr Wilkins of $765,000 for 2010, compared to $1.11 million for 2009.
In total IAG’s top nine executives, including Mr Wilkins, saw their total remuneration pool increase 20% to $20.14 million.
Besides the $327 million charge against the non-performing UK insurance businesses, IAG also suffered from bad weather claims (as did the industry) with major storms in Melbourne and Perth.
Investment earnings were hit by a 12% fall in sharemarkets in the 2009-10 financial year, as well as low and falling bond yields and record low rates for cash, especially in the US, Europe and the UK.
In the report, Mr Wilkins restated the company’s forecast for an improved year in 2011 with an insurance margin (where most of the profit comes from) of between 10.5% and 12.5%.
Gross written premium is expected to grow by 3% to 5%, he said.
"This guidance assumes losses from natural perils are in line with budgeted allowances of $435 million, no material movement in foreign exchange rates or investment markets, and lower net reserve releases than in the 2010 financial year (excluding the UK strengthening), Mr Wilkins said.
IAG shares fell 3c to $3.72.
That’s 31c above what they were at the end of June and the 2010 financial year.
They ended the 2009 financial year on June 30 of last year on $3.51, so there’s hardly been any out performance.
