CPA Australia board secretly made Alex Malley's contract more generous: inquiry
http://www.afr.com/business/accounting/ ... 129-gzvk5e
30 Nov 2017
by Aaron Patrick from AFR
CPA Australia's board clandestinely increased the termination period for its chief executive, Alex Malley, a few months after a campaign against him began, a decision that later forced the accountants' union to pay him $4.9 million when he was finally fired this year.
Even though an independent review found in February, 2015, that Mr Malley's two-year notice period was overly generous, the board decided in the following October to increase it to three years.
The meeting approving the increase was held in-camera and the details of the discussion were not recorded, according to an investigation of the organisation led by former federal auditor-general Ian McPhee in response to members' outrage at Mr Malley's high salary and rampant self-promotion.
The decision to increase Mr Malley's termination period was made nine months after Australian Financial Review columnist Joe Aston started writing a series of columns about Mr Malley that helped build momentum to have him fired this June.
The Melbourne-based organisation represents, trains and disciplines 162,750 certified practising accountants and accounting students, has 500 employees and generates $180 million annual revenue.
CPA Australia's large membership made it difficult for a relatively small group of rebels to remove Mr Malley, who dismissed them as largely irrelevant malcontents. But a stream of articles in 2016 and this year fuelled concern among leading members that Mr Malley's profile was damaging the organisation's reputation.
Mr Malley's $1.79 million salary made him one of the better-paid accountant union-leaders in the world, Mr McPhee's report suggests, which triggered the high payout when he was sacked, which compounded the anger among CPA members.
"The CEO's remuneration shouldn't be benchmarked against organisations that don't exist to serve their members," one member told Mr McPhee's inquiry. "Remuneration should be based on the responsibility and difficulty of the job."
Former CPA chairman Jim Dickson has been providing assistance to the new board but will be gone by the end of the year.
Former CPA chairman Jim Dickson has been providing assistance to the new board but will be gone by the end of the year. Andrew Meares
In response to complaints about the payout, Mr McPhee found that Mr Malley's mutual notice period was changed twice. In December, 2014, it was increased from one year to two years. Two months later the board was told by unidentified external advisers that was too generous.
"The review was intended to provide a high-level assessment of the employment agreement, dealing with the extent to which the agreement provides terms and conditions consistent with ordinary commercial expectations in Australia," Mr McPhee's report said. "The review stated that the two-year termination payment was significantly above the anticipated range."
The following October the board unanimously approved an increase to three years. "This decision was made in an in-camera session of the board (without the CEO present)," the report said.
Former CPA chief executive Alex Malley. The body's new board will look into the possibility of clawing back some of his ...
Former CPA chief executive Alex Malley. The body's new board will look into the possibility of clawing back some of his golden parachute of $4.9 million. Louie Douvis
The board has since been mostly replaced, there is a new chairman, and the organisation is restructuring itself to become more democratic. Mr Malley, who lives in a large Sydney waterfront house, has kept a fairly low profile.
Mr McPhee said it wasn't possible to recover the money from Mr Malley, or disclose his employment contract.
Country accountant Brett Stevenson, a leader of the campaign to remove Mr Malley, said Mr McPhee's failure to seek the recovery of the money was a key test of his entire report, which he called "a professional whitewash".
"I would give it a big fail on that alone," he said in an email. "It ignores the fundamental issue of holding the leadership of CPA Australia to account for poor decisions."
Mr McPhee previously recommended future CPA chief executives be paid less than Mr Malley, who used the position to turn himself into a celebrity with a television show, self-help book and billboard ads.
Related article: Inside story of Alex Malley's final days at CPA Australia
|Merry Christmas to Peter Wilson. When it was suggested that Peter Wilson should be independent of the old board so that we can have a fresh start Peter responded with "That's your issue". Summary of the meeting here: viewtopic.php?f=23&t=594|
A good summary of where we are up to by Joe Aston of the AFR, linked to from here: viewtopic.php?f=5&p=4137#p4137
If you are new to this website read the story so far: viewtopic.php?t=321#p1793
Check out some of the AFR articles, too many to list and check out some of the ABC reports: http://www.afr.com/business/accounting/ ... 215-h055ej http://www.afr.com/business/accounting/ ... 211-h02x1d http://www.abc.net.au/news/programs/the ... s,/8626662
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