Tuesday, October 2, 2012

Quality Journalism Rewarded

FAIRFAX MEDIA (FXJ) dipped briefly below 40 cents a few minutes ago. Good.

No new owner, not even even Ron Walker, could do such a bad job of steering Melbourne's only alternative to the Herald Sun's daily diet of kittens and Collingwood.

And another thing: Neither Walker nor Ms Rinehart would dream of paying themselves the $50,000 a week that CEO Greg Hywood has been pocketing while ushering staffers out the door.

WHOOPS:  There are doubts amongst commenters that Hywood collects $50,000 a week -- and it has to be admitted that those doubts are justified. From The Australian of August 19:

The company's remuneration report for last year shows that Mr Hywood picked up a base salary of $1,178,570, including a cash bonus of $290,000. However, the cash bonus Mr Hywood was in line to receive this year was worth considerably more because he was acting chief executive for part of 2011, being installed as the permanent chief in March last year.
Divided by 52 weeks, that $1.17 million sum comes to a paltry $22,664.80 per week.


  1. If I go to the Fairfax Press funeral, it will only be to dance on their grave.

    Thanks for the help, ABC, in assisting the demise of this sneering poorer cousin of yours!

  2. Walter Plinge of TemplestoweOctober 2, 2012 at 4:14 PM

    Pity. I gave up on the Herald-Sun when it went behind a paywall. I was in the barber's this afternoon and picked up the regular copy. It really is rubbish. I'm sure it's gone downhill over the past couple years. Sadly I am forced to glance at The Age online for Victorian news as The Oz is hopeless for that. The problem there is that sometimes inadvertantly you see the headline appended to a Michelle Grattan (&c) piece -- and feel soiled.

  3. The only thing that can save Fairfax's share price is a consolidation. 3 for 1 and she can be north of $1 tomorrow!

  4. Prof that is 2.6 million per annum - surely a wanker steering a business into bankruptcy doesn't get that much. Or am I being naive? I suppose given the condition the rag is in it is a rhetorical question.


  5. If they went down that path DaveA you can bet it would ( the share price ) deteriorate at a faster pace as projected dividends would make the buying ratio's - earnings per share - unrealistic.
    Actually I just made that up as I hate the low-down faggots that run The Age.

  6. Calling Anne Summers! FXJ needs your help!

  7. Professor,

    You are indeed a wise and generous man. I read your blog regularly to gain more insight into the world and (more specifically) into Australian current events.

    That said, no person or blog is perfect. You've hit on a great idea today. If you could include a daily update on Collingwood's roster changes, off-season training schedules and their progress on their doctorates in nuclear physics, your blog would become even more magnificent.

    1. Collingwood and doctorates in nuclear physics are mutually exclusive. The black and white knuckle draggers couldn't even spell the two words let alone understand the concept.

  8. Prof,

    Perhaps we need to coin a new form of currency to provide long suffering FXJ shareholders a ready-reckoner of the purchasing power of their plug-hole circling portfolio.
    We can call this new unit of currency the “FXJ”

    Some examples of the number FXJs distressed shareholders will have to unload to buy the necessities of life:-

    Holiday in France away from the red-necks … FXJ 100,000
    Hipster Fixie Bicycle … FXJ 2,000
    Tickets to Melbourne Writers Festival “Poetry and Fiction” session (including voluntary carbon offset)
    … FXJ 55
    Bottle of Decent Bio-Organic Wine … FXJ 100

    Hmmm ….. that will eat into the reserves at quite a rate.
    How about we lower our sights and go for the following:-

    Breakfast at “Pope Joan” (café owned by Larissa Dubecki’s husband and sometimes reviewed in the Age) … FXJ 50
    Latte at Inner City Café … FXJ 9
    McDonald’s Happy Meal … FXJ 8
    Copy of The Age … FXJ 6

    Annual Salary of Titanic Captain Hywood … FXJ 3,000,000 (PRICELESS!!)

    The Irish Lion

  9. A poor performance equates to $22k a week? I can run a business into the ground for much less, say $15k/week, Fairfax, I'm available, are you there?

  10. Apologies for the length - you might want to chop this out and put it somewhere else:

    Mr Hywood, who at the time was a Non-Executive Director of Fairfax, was appointed to the role of CEO in an acting capacity on 7
    December 2010 to enable the Board to conduct a global search for a new CEO following the resignation of former CEO and Managing
    Director Mr Brian McCarthy. Prior to this date Mr Hywood was paid in accordance with the remuneration of Non-Executive Directors.
    From 7 December 2010 until 1 April 2011 Mr Hywood was paid fixed fee remuneration amount of $2.4 million per annum (that is,
    $775,385 for that period). He was not eligible to receive any performance bonuses or other benefits during this period.
    On 7 February 2011 Mr Hywood was appointed to the role of CEO and Managing Director on an ongoing basis. From 1 April he was
    paid a base salary (“Fixed Remuneration”) of $1.6 million per annum. This Fixed Remuneration represents total fixed cost to the
    Company including superannuation and other benefits except as set out below.
    For the period 1 April 2011 to 26 June 2011, Mr Hywood was eligible for a pro-rated performance bonus (“Performance Bonus”) of
    up to 100% of Fixed Remuneration (prorated for the period) depending on achievement of defined performance criteria set by the
    Chairman and Chairman of the PPRC. The criteria included specific deliverables to be achieved over the three month period to ensure
    that the new strategy was embedded into the organisation. Twenty percent of the bonus was related to exceeding the 2011 financial
    year financial outcome committed to the market on 24 February 2011. The remaining eighty percent of the bonus was related to the
    development and implementation of the new strategy including building the new organisational structure and culture, and establishing
    the implementation plan and delivering set progress targets under that plan. The Board believed that the focus of the CEO over this
    three month period should be to drive the implementation of the new strategy, and therefore a higher emphasis was placed on the nonfinancial strategic targets than will occur for future performance periods.
    Following the end of the 2011 financial year, the Board determined that 72.5% of the target Performance Bonus was earned by
    Mr Hywood representing 62.5% achievement of the financial component and 75% achievement of the strategic component.
    Subject to shareholder approval, for the 2011 Performance year, Mr Hywood is entitled to an allocation of shares (purchased on market
    by the Executive Share Plan Trust) of $800,000 worth of shares which equates to 569,395 shares. The number of shares allocated is
    based on the market price of Fairfax shares on 7 February 2011 (Mr Hywood’s permanent appointment date) which was $1.40 per share


    Page 17

  11. Elizabeth (Lizzie) B.October 2, 2012 at 7:51 PM

    Readers? Hungry readers? Let them eat cake, Professor. Greg's OK and all's right with the world.

  12. It would seem, Professor, that Fairfax Ordinary Shares are getting more and more ordinary by the day.

    The Irish Lion

  13. The only man who can save Fairfax is Alan Jonea. If he were to switch to 2UE he would bring his army of listeners and cause a mass walkout by the organizations least useful employees.

  14. So, Hywood's bonus was awarded for downsizing the company. Shrinking to greatness?

  15. But if you want to know the identity of the real culprit who missed the significance of the Internet for Fairfax, look no further than the Chancellery closest to Randwick Race Course

    1. I'm buggered if I know how the poor man can possibly live on the miserable pittance of $22k per week,still I suppose he'd be entitled to first crack at groceries just past their use by date and staff discount on anything else.

  16. Lazlo ... no doubt Hilmer was a contributor but this is not just the work of one man.
    Good article in the AFR (can you believe it) by
    Christopher Joye describing the disaster that is Fairfax.
    He points out that none of the current Directors have any significant investment in the company. The following fairly succintly describes the underlying problem ......

    "Insulated by decades of print duopoly, Fairfax’s management, staff and board lost sight of its reason for being. Executives saw their mission as providing a public good, or “editorially independent” journalism. This became an end in itself. The board was a trophy for members of the establishment. Both dysfunctions afflict the company to this day.

    Fairfax has only one purpose in life: to make money for its owners. Editorial independence is nothing more than a brand dimension. And if you don’t like the idea of maximising shareholder wealth, you should work for a public broadcaster."

    The Irish Lion

  17. "Divided by 52 weeks, that $1.17 million sum comes to a paltry $22,664.80 per week."

    Yeah, but, it's lonely at the top.

  18. Quite so TIL. But if the CEO at the time thought that the Internet was insignificant to the business, and hence passed up seek.com for a bargain basement price, then it was an extreme symptom of the myopia.

  19. Fairfax says his base salary is $1.55 million. With cash bonuses and shares it goes to $2.02 million. So just shy of $30k per week base salary, plus ~$8.8k per week in cash bonuses and shares.


  20. "And if you don’t like the idea of maximising shareholder wealth, you should work for a public broadcaster."

    Quite so, as Tim Blair is so fond of saying. But if Fairfax's share price drops sufficiently low without the whole edifice breaking up, the ABC might find it within its budget, at which point Fairfax will find themselves working for a public broadcaster...