The analysis of Australia’s largest publicly listed companies was conducted by corporate governance advisory Ownership Matters.
It comes after Jennifer Westacott, the chief executive of the Business Council of Australia, this week called on companies to refrain from paying executive bonuses if they are receiving JobKeeper payments.
“Companies should not be paying executive bonuses if they are receiving JobKeeper,” Westacott said.
“It wasn’t designed for that. It was designed to keep people working.”
Ownership Matters sent a report to its clients on Wednesday entitled JobKeeper and Other Government Subsidies.
The report ran a ruler over 290 companies on the ASX 300 — the 300 largest companies by market value on Australia’s stock exchange — that have reported their full-year or half-year results for periods ending between March 31 and July 30.
It found 81 publicly listed companies received government subsidies related to COVID-19, with 63 of those receiving JobKeeper payments.
Within that group of 63 companies, 25 companies disclosed that they have paid executive bonuses worth a combined $24.3 million.
“Numerous entities who paid dividends also received material assistance from government subsidies,” the report noted.
Of those 25 companies, the entity that received the most in Jobkeeper subsidies is Star Entertainment Group, which operates Star Casino. It received $64 million in JobKeeper payments and also paid chief executive Matt Bekier a bonus of $830,000.
Footwear company Accent Group — which distributes brands Dr Martens, Athlete’s Foot, Vans, Saucony and Skechers — received $21.4 million in wage subsidies plus $7.6 million in rent waivers, and gave chief executive Daniel Agostinelli a $1.2 million bonus.
ELMO Software — a cloud-based HR and payroll software provider for businesses — paid cash bonuses to its CEO Danny Lessem ($465,000) and CFO James Haslam ($158,400) after receiving $2 million in government stimulus payments.
It also acknowledged in its financial report that “COVID-19 has not substantially impacted the operations of the group and its core operations … the group continues to operate effectively with business as usual”.
Ownership Matters has warned its clients that executive bonuses could be a problem for companies receiving JobKeeper payments.
“Executive incentive outcomes for those entities where JobKeeper payments were meaningful have already come under political and media scrutiny,” the report explained.
“The cultural signal of a board deciding to pay — and a management team electing to receive — bonuses in a year where a listed entity received significant government subsidies is an important one for investors to consider, especially for listed entities with significant exposure to government as a regulator or customer.”
According to Ownership Matters, these are the 25 companies on the ASX 300 that have paid bonuses to top executives deemed “key management personnel” (KMP) that also received JobKeeper wage subsidies. Not all of the bonuses are in cash, some are paid in shares. Values on June 30. The companies are:
Accent Group ($1.28 million to CEO Daniel Agostinelli)
Qube Holdings ($1.18 million to CEO Maurice James)
Star Entertainment ($830,000 to CEO Matt Bekier)
IDP Education ($680,000 to CEO Andrew Barkla)
Sealink Travel Group ($650,000 to retiring CEO Jeffrey Ellison)
Super Retail Group ($600,000 to CEO Anthony Heraghty)
NIB private health ($550,000 to CEO Mark Fitzgibbon)
ELMO Software ($465,000 to CEO Danny Lessem)
Lendlease ($420,000 to CEO Steve McCann)
Ingenia Communities ($411,000 CEO Simon Owen)
Collins Foods ($350,000 to CEO Graham Maxwell)
Carsales.com.au ($350,000 to CEO Cameron McIntyre)
Pinnacle Investment Management Group ($300,000 to managing director Ian Macoun)
Bingo Industries ($300,000 to CEO Daniel Tartak)
Money3 ($280,000 to CEO Scott Baldwin)
Lynas Corporation ($260,000 to CEO Amanda Lacaze)
Ardent Leisure ($250,000 to Chris Morris)
Senex Energy ($240,000 to CEO Ian Davies)
Domain ($220,000 to CEO Jason Pellegrino)
Starpharma Group ($200,000 to CEO Jackie Fairley)
Domino’s Pizza ($150,000 to CEO Don Meij)
Integral Diagnostics ($140,000 to CEO Ian Kadish)
Monash IVF Group ($50,000 to CEO Michael Knaap)
Village Roadshow ($600,000 to KMPs, but not CEO)
AMA Group ($90,000 to KMPs, but not CEO)
The Ownership Matters report has criticised the JobKeeper program’s lack of transparency.
“Unlike New Zealand’s wage subsidy scheme, where all employers who received payments were disclosed in a publicly available online database, no such disclosure was required under the Australian Government scheme,” the report concluded.
Some firms receiving JobKeeper have paid out increased dividends to shareholders and bonuses to executives, and one leading expert argues “that’s purely due to bad design” of the scheme.
It criticised the lack of standardised reporting practices for companies receiving JobKeeper payments and warned investors need to be wary of how companies are choosing to disclose their subsidies in their financial reports because if the subsidies are not disclosed clearly they can be hidden in revenue and used to inflate profits and executive bonuses.
“Accounting choices for JobKeeper and other government subsidies varied between entities,” the report found.
“Some accounted for stimulus grants as an offset to employee expenses, and others booked payments as income.
“Some others did not make explicit where such items appeared in their accounts but disclosed it as part of their ‘operating and financial review’ disclosures and, in a small minority of cases, some entities provided no disclosure of government assistance but the existence of such assistance was disclosed by the government itself.”
Andrew Leigh, the shadow assistant minister for Treasury, said when he drew attention to the issue in Federal Parliament last week, he did not think it would be so widespread.
“I’m shocked,” he told the ABC.
“I thought it would have been a number of isolated examples, but it seems to be extraordinarily widespread.
“It’s disappointing because I think there’s an implied social contract that if your firm is getting taxpayer assistance it shouldn’t be paying bonuses to executives.”
On Sunday, Westacott told the ABC’s Insiders program that Australian companies should not be paying executive bonuses if they are receiving taxpayer support.
“I would urge those companies to really think about these decisions because we have to build community confidence [in the program],” she said.
Leigh said the Federal Government should be pressuring businesses to stop paying bonuses if they are getting government assistance.
“I’d like to see the Treasurer showing the kind of moral leadership that you’ve seen from the Business Council,” he said.
“It feels like we’re living through the banking royal commission stuff all over again in which the last people to hold corporate Australia to account are the Coalition.”
The Ownership Matters report also questioned the practice of companies paying dividends to shareholders (including foreign shareholders) after receiving JobKeeper and other government subsidies.
For instance, it noted Accent Group received roughly $25 million in total government subsidies and paid out $23 million in dividends.
It reported that Qube Holdings received $19.4 million in total government subsidies and paid out $43.3 million in final dividends.
The analysis found $943 million in JobKeeper payments have been received by companies on the ASX 300 to date.
The four largest recipients — Qantas ($267 million), Crown Resorts ($111 million), G8 Education ($86 million) and Star Entertainment Group ($65 million) — have accounted for over half of all JobKeeper payments amongst the group.
Companies with more than $1 billion a year in turnover had to show a 50 per cent drop in revenue at the start of the pandemic to claim the subsidy, rather than the 30 per cent fall required for smaller firms.
While Qantas is the largest recipient of JobKeeper and other government subsidies on the ASX 300, its chief executive Alan Joyce has said he would not be taking a salary and no bonuses would be paid to the airline’s executives this year.
He has also asked executive staff to take a 15 per cent pay cut.
-AAPJump to next article