Fletcher Building CEO got $6.9m pay packet but doesn’t own an Auckland house

Fletcher Building chief executive Ross Taylor earned cash, benefits and the right to get shares in the next three years worth a total combined $6.9 million in the last year.

Yet he doesn’t own an Auckland house – the prized item many others might consider if we earned that much.

As one of New Zealand’s highest-paid corporate executives, the Queensland-born chief yesterday delivered a turnaround for the business from a $196m net after tax loss for the June 30, 2020 year to a $305m profit to June 30, 2021.

Despite the big pay packet, Taylor is a tenant.

It’s not because he can’t afford a house.

He chooses not to buy here.

That is partly because for many years, his main residence has been in Sydney where his family home is near Manly in the city’s north.

Taylor prefers to rent in Parnell and divides his time between Penrose and Sydney, heading a business which employs 14,500 staff of whom thousands work in Australia.

Fletcher’s annual report out yesterday revealed how much Taylor was paid for the year to June 30, 2021.

He got cash remuneration of $4.9m, including a short-term incentive for his performance of $2.9m, base remuneration of $1.9m and other benefits of $130,000.

In addition, he got a grant of 375,273 shares worth $2.05m but he won’t get access to those for three years and only subject to meeting a shareholder return performance measure.

Not all the share grants Taylor has been entitled to receive previously have been granted to him. For example, the grant made to him in 2017 with a face value of $2m was 182,561 shares but he did not meet the shareholder return performance measure therefore those had to be forfeited.

In the June 30, 2020 year, Taylor earned a base salary of $1.9m, plus he got a $2m share allotment, yielding him a total $3.9m in pay and shares from his job.

In the June 30, 2019 year, he got $5.2m: a $3.2m base salary plus an extra $2m shares.

Green dots appearing in the latest annual report marked his excellent performance in the 2021 year.

Those mark various targets, including financial such as group EBIT, which came in a $669m and was marked as “materially outperformed”. Group cash also got a green dot for Taylor under the remuneration section of the annual report.

Even better, green circles around those green dots showed Taylor exceeded target achievement for group earnings and cash.

Orange dots signalled “partial achievement against target” and Taylor got only one of those: for talent and diversity targets delivered across the business in accordance with board approved plans. The number of women in operational roles was largely flat in the latest year. Clear targets and actions were in place to improve this aspect of the business, although the pay parity gap narrowed, the report said.

Green dots for full achievement were won on safety, financial and individual goals.

Max Whitehead of Whitehead Group Employment Solutions said that to the average wage earner, Taylor’s $6.9m pay in cash and future shares might seem ridiculous and they might say nobody should get that much.

“But he only gets the big bonus if he achieves certain predetermined goals and targets. Are his efforts worth that much? His thinking and decision-making skills are.

“Taylor has proven success. He is likely to be made better offers to go elsewhere by other boards, hungry for success. The question is, if Ross had not been the CEO would the business be equally successful? Maybe not,” Whitehead said.

Taylor had successfully negotiated his pay before he took the position, Whitehead speculated.

“The CEO has told the board he will make the business a success. It will cost them no extra unless he achieves that success. All he wants is a small percentage of the huge success he potentially can deliver. This is commonly known as no win, no fee.

“What has the board to lose by accepting his offer? Nothing. So it agrees as the vision of potential success deems the payment as minute,” Whitehead said.

Other employees should consider making employers a similar offer, he said.

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