Full extent of Alex Malley's payout revealed -6 April 2018
by Edmund Tadros - AFR
http://www.afr.com/business/accounting/ ... 406-h0yfgh
CPA's Australia's payments to key management personnel doubled to almost $10 million in 2017, amid the "most challenging and disruptive year" in the accounting body's history, thanks to a $5 million plus termination payment given to fired CEO Alex Malley.
The high-profile Mr Malley was fired after CPA members revolted over details of his $1.79 million pay packet and other poor governance and spending decisions at the association. The rebellion also saw the entire board resign with the promise of wholesale reform from a new board.
CPA's annual report, released on Friday, revealed Mr Malley's total pay for last year was $5.8 million, which included a payout worth three-year's base pay and annual leave and long service leave entitlements worth another $515,834.
The report also revealed that Jeff Hughes, a long-term CPA executive and chief operating officer who resigned last year, earned $1.57 million in 2017, up from $902,259 in 2016. The jump in pay was thanks to a $759,499 termination payment made by CPA to Mr Hughes.
Total remuneration for key management personal was $9.65 million in 2017, up from $5.5 million in 2016. Including payments to directors of the body's foreign subsidiaries, total key management pay was $10.7 million up in 2017 up from $6.8 million in the previous year.
The remuneration of executives and directors at CPA, perceived by a number of members as excessive, was among the key issues that led to disaffected CPAs mounting an unprecedented and successful campaign during the middle of last year to topple the association's leadership and board.
The annual report also revealed how unhappy the 120,000-strong Australian membership are about the association. Australian members recorded the lowest satisfaction rating, 5.1 out of 10, of the eight surveyed regions, and the second lowest rating for value, 4.4 out of 10. Only UK members had a lower perception of value, of 4.3 out of 10.
One common reason for the low rating was "the negative impact of governance issues on the CPA Australia brand and reputation within the industry," the annual report stated.
Losses at CPA Australia Advice decreased to $3.8 million in 2017, down from $5.7 million in 2016, meaning the operation has now lost a combined $11.2 million since it began operation in 2015.
Income at CPA Australia Advice was $217,000 in 2017, up from $48,000 in 2016, while expenses were $4 million, down from $5.7 million in the previous year.
CPA admitted the financial advice arm was performing "significantly below our original projections" with only 37 representatives as of December 2017.
"CPA Australia Advice has not performed in line with original expectations and has failed to meet the targets for the number of authorised representatives after 18 months of operation," the annual report stated.
CPA has provided CPA Australia Advice with a $20 million overdraft facility of which $12.4 million has already been advanced.
CPA Australia Advice review
CPA will now call in big four accounting and consulting firm PwC to review CPA Australia Advice.
"PwC has been appointed to undertake this review and a final report is expected in June 2018," chairman Peter Wilson said a statement sent out with the annual report to the body's 164,000-strong membership.
"PwC will review all aspects of the business rationale, conduct, operational principles and practices, as well as the business case and competitiveness of this subsidiary in both the immediate and longer term.
"Until the review is complete and the report is received and considered, the directors will continue to operate CPA Australia Advice in accordance with the existing operating structure."
The total cost of the Independent review into the association's operations cost $1 million. The review vindicated the concern of members and found "the board and the then-CEO lost touch with a large cohort of the membership of CPA Australia".
Despite the horror year, the accounting body posted an increase in overall consolidated profit of $10.4 million, up from $8.2m in 2016.
The result was due to strong profits in CPA Australia's overseas operations in Hong Kong, Malaysia, Singapore and Vietnam.
In contrast, CPA's Australian arm lost $18 million with total expenses of $151.1 million outstripping revenue of $133.1 million.
"2017 was the most challenging and disruptive year in CPA Australia's history," Mr Wilson said the members' statement.
"Through the efforts of many members CPA Australia has undergone considerable change. We have a completely new Board appointed solely by members of Divisional Councils, a new CEO appointed by the Board after a vigorous national and international executive search, and a commitment to transparency that means this year's annual report has levels of disclosure that exceed anything that has been published previously."
Battle not over
The battle over the way the association is run is far from over. A range of members, including Brett Stevenson, Jen Dalitz, Glen Hasselman and Andrew North, have put together resolutions for the upcoming annual general meeting, which will be held in Melbourne on May 22.
Mr Hasselman and Mr North are seeking direct voting of directors, a way for members to communicate directly with each other and to remove chairman Peter Wilson from the role.
The resolutions will require either 50 per cent to 75 per cent of the vote on the day.
|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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