There's concerns that the Warehouse's top level salaries don't match the company's declining performance.
The Warehouse Group's shares fell to a record low of $0.97 after forecasting earnings would fall at least 64 percent year-on-year.
Former chief executive Nick Grayston was paid $2.79 million, out-earning his retail counterparts in the 2023 financial year.
Shareholders' Association Chief Executive Oliver Mander unpacks this further.
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Speaker 1 (00:00):
Ever, du for c Ellen, there are concerns that the
warehouse is paying its executives too much given how poorly
the company's been performing. Despite the warehouse's shares falling to
a record low of ninety seven cents on Monday, former
chief executive Nick Grayson was paid a total of just
under two point eight million dollars in twenty twenty three,
which is more than any of his other counterparts in retail.
(00:20):
Oliver Amander is the CEO of the New Zealand Shareholders
Association with US. Now, hey, Oliver, how are you very well?
Thank you? This is this an historic problem where they
signed him on a really awesome deal when the company
was doing well, and then the company started doing poorly
and he was still, unfortunately on an awesome deal.
Speaker 2 (00:36):
Well, there's probably a bit of that, but actually what
it does relate to in that figure you've mentioned of
two point eight million, some of that big chunk of
that relates to incentives, And of course the incentives are
fine from a shareholder's perspective when the company is doing well,
and when the company is not doing quite so well, obviously,
then an incentive probably doesn't apply. And the reason he
(00:57):
got paid an incentive of one point one million. That's
not a short term incentive actually FY twenty three, so
the last financial year he got no short term incentives
at all for his performance at the warehouse, and he
did he got his base salary of one point seven million. However,
the incentive that was paid related to long term incentive
(01:17):
awards that made back in twenty twenty. And guess what,
back in twenty twenty, the warehouse was actually doing pretty well.
Speaker 1 (01:22):
So does this say to you that the incentives that
maybe the level was set too low as well.
Speaker 2 (01:29):
Level was set too like it was too easy to
strike it. Yeah, and look possibly, and that's something we
got a little bit more digging into in terms of
the vesting conditions associated with that. Normally, when you were
awarded an incentive and shares performance rights, then there's the
vesting condition that goes that that vesting condition relates to
share price performance. Often as note, and certainly I think
(01:50):
the Warehouse does have a condition that relates. That incentive
that you actually get paid in the end related very
much to the share price performance. And now it's gone
against its pairs. So yes, last year that the incentive
we received was mostly that long term incentive, but probably
data from the previous.
Speaker 1 (02:08):
Is a historic thing. Do you think, though, now that
the company is doing so poorly, do you think it's
going to be different for his replacement. I mean, whoever
takes over from him is probably not going to get
the same kind of pay.
Speaker 2 (02:17):
Right well, not in the short term. I actually said
that if the company, the company needs to be turned around,
that will take a lot of work. They need a
very good leader to come in there and actually to
have some milestones in place that really reset companies change
back to being a profitable and high performing entity. So
arguably and to still we have still a very big organization.
(02:39):
It still has eleven thousand staff, got stores all across
New Zealand. It's it's still it has a huge share
of retail wallet if you will, in a really tough
economic environment right now. So the base salary is meant
to reflect that, and the base salary that is higher
than his peers or the CEO's ps. Sorry at excoes
and KMD what can do brands, but that's probably appropriate.
(03:03):
What we're really interesting there will be the infrastructure that
they put in place, because actually you do want some
center structure and reflects long term gains for shareholders, so
that long term performance off the warehouse, and also they
reflect some of those short term or more short term
transformational while don't really needed to turn the company around.
So actually, no, I don't know if you will see
(03:25):
much change in terms of the remuneration structure or potential
out What it does mean is that if the CEO
or incoming CEO is successful in transforming the warehouse and
making share price you up again, You'll probably be calling
me in three years time saying, hey, the CEO has
got paid an awful this year and that's that's that
will probably be right because those shares, if there's if
(03:48):
that's succeeded, they will see an increase in value in
the shares and therefore their own remuneration.
Speaker 1 (03:54):
That's okay, yep, absolutely if they deserve it. No one's
going to complain about it, hopefully, Oliver. Thank you so much,
appreciate your time. As always, it's all of them and
a chief executive of the Shareholders Association.
Speaker 2 (04:03):
For more from Hither Duplessy Allen Drive.
Speaker 1 (04:05):
Listen live to News Talks a B from four pm weekdays,
or follow the podcast on iHeartRadio.
Ever, du for c Ellen, there are concerns that the
warehouse is paying its executives too much given how poorly
the company's been performing. Despite the warehouse's shares falling to
a record low of ninety seven cents on Monday, former
chief executive Nick Grayson was paid a total of just
under two point eight million dollars in twenty twenty three,
which is more than any of his other counterparts in retail.
(00:20):
Oliver Amander is the CEO of the New Zealand Shareholders
Association with US. Now, hey, Oliver, how are you very well?
Thank you? This is this an historic problem where they
signed him on a really awesome deal when the company
was doing well, and then the company started doing poorly
and he was still, unfortunately on an awesome deal.
Speaker 2 (00:36):
Well, there's probably a bit of that, but actually what
it does relate to in that figure you've mentioned of
two point eight million, some of that big chunk of
that relates to incentives, And of course the incentives are
fine from a shareholder's perspective when the company is doing well,
and when the company is not doing quite so well, obviously,
then an incentive probably doesn't apply. And the reason he
(00:57):
got paid an incentive of one point one million. That's
not a short term incentive actually FY twenty three, so
the last financial year he got no short term incentives
at all for his performance at the warehouse, and he
did he got his base salary of one point seven million. However,
the incentive that was paid related to long term incentive
(01:17):
awards that made back in twenty twenty. And guess what,
back in twenty twenty, the warehouse was actually doing pretty well.
Speaker 1 (01:22):
So does this say to you that the incentives that
maybe the level was set too low as well.
Speaker 2 (01:29):
Level was set too like it was too easy to
strike it. Yeah, and look possibly, and that's something we
got a little bit more digging into in terms of
the vesting conditions associated with that. Normally, when you were
awarded an incentive and shares performance rights, then there's the
vesting condition that goes that that vesting condition relates to
share price performance. Often as note, and certainly I think
(01:50):
the Warehouse does have a condition that relates. That incentive
that you actually get paid in the end related very
much to the share price performance. And now it's gone
against its pairs. So yes, last year that the incentive
we received was mostly that long term incentive, but probably
data from the previous.
Speaker 1 (02:08):
Is a historic thing. Do you think, though, now that
the company is doing so poorly, do you think it's
going to be different for his replacement. I mean, whoever
takes over from him is probably not going to get
the same kind of pay.
Speaker 2 (02:17):
Right well, not in the short term. I actually said
that if the company, the company needs to be turned around,
that will take a lot of work. They need a
very good leader to come in there and actually to
have some milestones in place that really reset companies change
back to being a profitable and high performing entity. So
arguably and to still we have still a very big organization.
(02:39):
It still has eleven thousand staff, got stores all across
New Zealand. It's it's still it has a huge share
of retail wallet if you will, in a really tough
economic environment right now. So the base salary is meant
to reflect that, and the base salary that is higher
than his peers or the CEO's ps. Sorry at excoes
and KMD what can do brands, but that's probably appropriate.
(03:03):
What we're really interesting there will be the infrastructure that
they put in place, because actually you do want some
center structure and reflects long term gains for shareholders, so
that long term performance off the warehouse, and also they
reflect some of those short term or more short term
transformational while don't really needed to turn the company around.
So actually, no, I don't know if you will see
(03:25):
much change in terms of the remuneration structure or potential
out What it does mean is that if the CEO
or incoming CEO is successful in transforming the warehouse and
making share price you up again, You'll probably be calling
me in three years time saying, hey, the CEO has
got paid an awful this year and that's that's that
will probably be right because those shares, if there's if
(03:48):
that's succeeded, they will see an increase in value in
the shares and therefore their own remuneration.
Speaker 1 (03:54):
That's okay, yep, absolutely if they deserve it. No one's
going to complain about it, hopefully, Oliver. Thank you so much,
appreciate your time. As always, it's all of them and
a chief executive of the Shareholders Association.
Speaker 2 (04:03):
For more from Hither Duplessy Allen Drive.
Speaker 1 (04:05):
Listen live to News Talks a B from four pm weekdays,
or follow the podcast on iHeartRadio.
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