Suncorp Management Underestimate Shareholders

From the Sydney Morning Herald:

Suncorp admits it got it wrong

THE newly-expanded insurance and banking combine, Suncorp-Metway, yesterday survived an investor rebellion over its plans to hand performance-free shares worth up to $5.3 million to chief executive John Mulcahy but not before admitting it had handled the issue badly....

In all, the new contract could deliver Mr Mulcahy an extra $7.6 million over and above his old deal through to 2010....

As a non-binding vote, the board could not be forced to go back on its deal with Mr Mulcahy. But Mr Story accepted the blame for misreading the mood of investors and said their concerns would be reflected in any future reshaping of Suncorp's executive payments.

"We accept that these matters were not handled well by us in that the same objectives could have been achieved by the utilisation of a different structure without impact on the principle," he told shareholders....

The remuneration report also outlined "sweetheart" arrangements for another 37 senior executives worth a total of $9 million between them if they stay in place until next October.

I must admit to being pleasantly surprised by these events. Institutional shareholder's usually act as a rubber stamp on management remuneration packages. It's nice to see shareholders actually raising objections to being fleeced by the people who are supposed to run the company for their (the shareholders) benefit.

The last thing Australia needs is a corporate culture like Wall Street where a CEO who loses $8.4 billion in a single quarter can walk away with $160 million in severance pay. Hopefully the Suncorp (SUN) saga will send a message to other companies that shareholders won't put up with the brazen theft of their wealth. Unfortunately incidents like the one at Suncorp are still the exception rather than the rule.