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Is the $4.9m Termination payment unlawful?

Posted: Sat Jun 24, 2017 9:28 am
by Stomper

Re: Is the $4.9m Termination payment unlawful?

Posted: Sat Jun 24, 2017 9:58 am
by nakedadmin
A very good question. I'm not sure if it only applies to listed companies. They perhaps didn't envisage that a NFP could act in such a ridiculous way.

Re: Is the $4.9m Termination payment unlawful?

Posted: Sat Jun 24, 2017 10:18 am
by GenYCPA
http://www.austlii.edu.au/au/legis/cth/ ... s200f.html

I don't want to dampen anything - but we need to look at this in light of Section 200F - Excempt benefits and benefits given in certain circumstances.
(2) Subsection 200B(1) does not apply to a benefit given in connection with a person's retirement from an office or position in relation to a company if:
(a) the benefit is:
(i) a genuine payment by way of damages for breach of contract;
As part of the review that will look into all these matters, the termination payment should be investigated to ensure it complied with all relevant legislation.

Re: Is the $4.9m Termination payment unlawful?

Posted: Sat Jun 24, 2017 10:18 am
by aceone
Hi all
Sorry to be a damp squib here...but, given the very reasonable queries about the validity of the appointment of the 6th director - surely we must ask ourselves if the 5 validly appointed directors (which are less than a quorum) can have made a valid termination of the CEO? Furthermore, is the announced termination payment validly made?
Please don't think I'm not pleased with this turn of events...I'm just concerned about the validity of the turn of events.

Re: Is the $4.9m Termination payment unlawful?

Posted: Sat Jun 24, 2017 10:30 am
by nakedadmin
Another good reason to get rid of the remaining Directors.

Re: Is the $4.9m Termination payment unlawful?

Posted: Sun Jun 25, 2017 6:57 pm
by Stomper
Looks like the payout maybe lawful - but "unorthodox"

afr

NEWS
CPA Australia's $4.9 million payout to Alex Malley 'extremely unorthodox'

June 25 2017 - 5:53PM
CPA Australia's $4.9 million termination payout for its former chief executive Alex Malley has stunned experts in the field, who have labelled it as "extremely unusual" and more than three times the normal package.

Employment barrister Stuart Wood said the payout, which was 3.6 times Mr Malley's $1.37 million base salary, was unheard of for departing senior managers, who usually received no more than a year's salary if terminated before their contract ends.


"I've been around for 25 years and I don't think I've ever seen a package the size of this," he said.

"For a manager, including a CEO, to come into an established business, it's most unorthodox to have a fixed-term contract without a notice period. And if you do, it is extremely unorthodox to have a notice period beyond a year because you might end up paying for nothing."

CPA chairman Jim Dickson said in a statement that Mr Malley's $4.9 million payout was made "in accordance with our obligations" and revealed "in the interests of full disclosure".

However, the organisation refused to reveal the basis for the payout, with a spokesperson saying "the terms of the separation, apart from the amount, remain confidential".

Entitlements 'wouldn't amount to much'

Mr Wood said it was possible that the amount included Mr Malley's accrued entitlements over his almost eight years as CEO, such as annual leave, long service leave and certain bonuses.

But he said "annual leave should be taken and paid out each year, long service leave wouldn't amount to much and it's hard to see why a bonus would be paid in these circumstances".

"The normal package for a CEO who has joined an established business and is not being terminated for misconduct is six to twelve months."

Last year, Mr Malley earned $1.79 million last year including $1.37 million in fixed pay, a $345,639 bonus, $35,000 in superannuation and $38,561 in other benefits.

For ASX-listed companies, termination payouts for senior executives are restricted to their average base salary over one year and require shareholder approval beyond that amount.

However, the Corporations Act provisions, introduced in 2009, do not cover officers at unlisted public companies, charities, or proprietary limited companies as is the case with CPA Australia.

Michael Robinson, director at remuneration consultancy Guerdon Associates, said it was "very rare" for shareholders to approve any termination package beyond 12 months' base salary but would not comment on the standard payout for private companies "as we just don't have the data".

Freehills emeritus partner Bob Baxt, specialising in corporate law, said the CPA board of directors was "obliged to act in the best interest of company, it can't act out of spite." He said it would be "very difficult" for members to establish a case against the board on this basis.

CPA's $4.9 million payout comes as the Financial Review revealed the organisation's financial advice subsidiary suffered a $5.7 million loss last year after paying out $3.8 million in staff expenses.

The CPA board has decided that Mr Malley's acting replacement, chief operating officer Adam Awty, will be paid as per his current role as COO. Mr Awty earned $949,395 in total remuneration last year.

http://www.afr.com/news/policy/industri ... 625-gwy2vk

Re: Is the $4.9m Termination payment unlawful?

Posted: Sun Jun 25, 2017 7:29 pm
by slaa4044
I have asked the Board (copy on Jen Dalitz thread) about the 'contract' they have entered with Mr Awty.

If the Board and strategy remain the same, will Mr Awty not be 'terminated' and receive a similar multi million dollar payout? Is this the exit strategy for those overpaid executives?

Re: Is the $4.9m Termination payment unlawful?

Posted: Sun Jun 25, 2017 8:36 pm
by Eric Nacpa
Probably not.

Given the Boards strong public endorsement the recent termination would amount to breach of contract in the absence of misconduct.
I expect the Board only did a u turn when they lost support of the divisions and they didn't see that coming (which is very telling).
CEO played it smart and the Board took the easy way out. I hope they didn't release him from liability and provide an indemnity as well :roll: .
If that payment was based on competent legal advice, there's a lot more water to go under this bridge ............

If only ASIC had form for doing what its supposed to - we could be more confident that this mess would be disinfected in daylight.

Remember, when you suspect a conspiracy, expect to find incompetence.

Disclaimer - not a legal opinion - just one based on my experience.