Pittwater Life January 2024 Issue
LOCAL GUIDE: 193 THINGS TO DO
1991‘DEVELOPMENT ONSLAUGHT’ FEARS / BEACHES ACHIEVERS
HOLIDAY CROSSWORD + PUZZLES / BARRENJOEY BOATSHED
THE WAY WE WERE / HOT PROPERTY / SEEN... HEARD... ABSURD...
LOCAL GUIDE: 193 THINGS TO DO
1991‘DEVELOPMENT ONSLAUGHT’ FEARS / BEACHES ACHIEVERS
HOLIDAY CROSSWORD + PUZZLES / BARRENJOEY BOATSHED
THE WAY WE WERE / HOT PROPERTY / SEEN... HEARD... ABSURD...
Business Life: Money with Brian Hrnjak Business Life Rebellion on the floor: whose money is it anyway? This month, quite contrary to the spirit of Christmas giving, we look at the question of companies getting into causes and donating shareholders’ funds and ask: Whose money is it anyway? I can’t be the only regular user self-checkouts at Woolworths who’s wondered where my invite was to the staff Xmas party this year. Woolworths, along with many other large Australian companies, have extracted permanent operating efficiencies by making customers do much of the work previously done by staff and then proceed to spend more on marketing telling us how good they are. More and more of this marketing is in the form of sponsorships and corporate giving. But how valid is it for a company like Woolworths, an ASX public listed company, to engage in activities like corporate giving or getting involved in questions of conscience? Is it a valid form of brand building, or is it a futile exercise in corporate soul searching? Would it alter your perception of Woolworths if you knew that the board awarded senior executives ‘safety bonuses’ as part of their remuneration even after the deaths of two employees in separate workplace incidents that are still the subject of ongoing investigation? Would it bother you that a Woolworths employee, Jo Wright, who is also a shareholder, felt the need to have the following exchange at the Company’s AGM as reported in The Sydney Morning Herald on 15 December: “Wright, a staff member on the supermarket floor, and her colleagues were pushing for a $4 hourly increase to their base rates, the Woolworths board wanted to reward senior executives with a portion of their safety bonus to their seven-figure salaries. ‘My base rate pays $25.12 an hour and my team bonus last year was a packet of Cadbury Favourites,’ Wright, also a shareholder, began. ‘I’m not a member of any union, but I do support a $29 base rate pay. In our store, we have several team members who are working three jobs to make a living wage… Is it time for merit-based remuneration existing alongside the current grade system using the criteria that applies to executive team pay increases?’” Many large shareholders ultimately agreed with Ms Wright with approximately 28% of the Company’s proxy holders voting against the Company’s remuneration report on executive pay at the AGM. This is regarded as a ‘first strike’ and if it is 58 JANUARY 2024 The Local Voice Since 1991
epeated at the following year’s AGM, it prepares the ground for a board spill. Another iconic Australian company to suffer a similar fate at its AGM was Qantas. Qantas copped a massive 83% vote against its remuneration report caused by their spat with the media and Federal government and the subsequent brand damage as former CEO Alan Joyce exited the company. Both Woolworths and Qantas also received criticism from a range of stakeholders for entering the ‘Voice’ debate as highprofile supporters of the ‘Yes’ side. Of course, they weren’t alone and were joined in this endeavour by companies such as BHP, Rio and Wesfarmers who each contributed $2 million to the cause. It’s a tricky business for companies to pick sides in what is essentially a question of conscience with a binary win or lose outcome; you run the risk of upsetting a substantial portion of your customer base. Why spend millions on sponsorships, charities and causes? According to GivingLarge, a research provider in the area of corporate philanthropy (whose reports ironically are not free), the top 50 corporate philanthropists have for the first time topped $1.5 billion in donations. According to their report dated 30 November which also appeared in the AFR: “Woolworths says philanthropy is also a focus for directors. Woolworths recorded a near tripling of its giving program this year, to $122 million. ‘Our board takes a very keen interest in our philanthropic agenda as it is a key part of the wider group’s purpose, in which everyone at Woolworths Group has a part to play. Food relief activity is discussed regularly with the board,’ says Woolworths chief sustainability officer Alex Holt. Woolworths attributes the surge in giving mainly to the ability, for the first time, to accurately value the amount of food donated to its food rescue partners, such as OzHarvest, Foodbank and FareShare. The value of food donated accounted for $76 million of the increase, while the remainder came from a rise in financial contributions, Holt notes.” Elsewhere in the report there was insight into what moti- The Local Voice Since 1991 vates some companies over and above the pure marketing effect: “The rise in corporate giving comes as surveys show younger employees increasingly want to work at companies whose values are aligned with theirs. [Our giving program] is... a retention tool.” So, it’s a feel-good factor for the staff and management. Putting some humanity over the top of the cold corporate bones, so to speak. The only problem, and it was a big problem for both Woolworths and Qantas, is that all the causes, philanthropic endeavours and corporate giving are worth nothing to your brand when you are vulnerable to claims that you have been diddling your suppliers, staff and customers for years. Eventually, the public does get around to seeing these feelgood efforts by big companies behaving badly for what they are worth and that’s very little unless you happen to be the direct beneficiary of the donation or cause. Unless they are very large, shareholders – ultimate owners of the business – have little or no access to management or directors of corporations. In the main they must resort to the angry email or voting at the annual general meeting. If last year was anything to go by the scorecard for corporate Australia this reporting season was bad, as Sumeyya Ilanbey noted in The SMH on 15 December: “Australian investors have made history this year, issuing a strike against the remuneration reports of 32 companies, the highest ever backlash. They didn’t believe the performance of companies they had invested in justified the exorbitant wages and bonuses of executives.” Brian Hrnjak B Bus CPA (FPS) is a Director of GHR Accounting Group Pty Ltd, Certified Practising Accountants. Office: Suite 12, Ground Floor, 20 Bungan Street Mona Vale NSW. Phone: 02 9979-4300. Web: ghr.com.au and altre.com.au Email: brian@ghr.com.au These comments are general advice only and are not intended as a substitute for professional advice. This article is not an offer or recommendation of any securities or other financial products offered by any company or person. JANUARY 2024 59 Business Life
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Business <strong>Life</strong>: Money<br />
with Brian Hrnjak<br />
Business <strong>Life</strong><br />
Rebellion on the floor:<br />
whose money is it anyway?<br />
This month, quite contrary<br />
to the spirit of Christmas<br />
giving, we look at the<br />
question of companies getting<br />
into causes and donating shareholders’<br />
funds and ask: Whose<br />
money is it anyway?<br />
I can’t be the only regular<br />
user self-checkouts at Woolworths<br />
who’s wondered where<br />
my invite was to the staff Xmas<br />
party this year. Woolworths,<br />
along with many other large<br />
Australian companies, have extracted<br />
permanent operating efficiencies<br />
by making customers<br />
do much of the work previously<br />
done by staff and then proceed<br />
to spend more on marketing<br />
telling us how good they are.<br />
More and more of this marketing<br />
is in the form of sponsorships<br />
and corporate giving.<br />
But how valid is it for a company<br />
like Woolworths, an ASX<br />
public listed company, to engage<br />
in activities like corporate<br />
giving or getting involved in<br />
questions of conscience? Is it a<br />
valid form of brand building, or<br />
is it a futile exercise in corporate<br />
soul searching?<br />
Would it alter your perception<br />
of Woolworths if you knew that<br />
the board awarded senior executives<br />
‘safety bonuses’ as part<br />
of their remuneration even after<br />
the deaths of two employees in<br />
separate workplace incidents<br />
that are still the subject of ongoing<br />
investigation?<br />
Would it bother you that<br />
a Woolworths employee, Jo<br />
Wright, who is also a shareholder,<br />
felt the need to have<br />
the following exchange at the<br />
Company’s AGM as reported in<br />
The Sydney Morning Herald on<br />
15 December: “Wright, a staff<br />
member on the supermarket<br />
floor, and her colleagues were<br />
pushing for a $4 hourly increase<br />
to their base rates, the Woolworths<br />
board wanted to reward<br />
senior executives with a portion<br />
of their safety bonus to their<br />
seven-figure salaries. ‘My base<br />
rate pays $25.12 an hour and<br />
my team bonus last year was a<br />
packet of Cadbury Favourites,’<br />
Wright, also a shareholder, began.<br />
‘I’m not a member of any<br />
union, but I do support a $29<br />
base rate pay. In our store, we<br />
have several team members<br />
who are working three jobs to<br />
make a living wage… Is it time<br />
for merit-based remuneration<br />
existing alongside the current<br />
grade system using the criteria<br />
that applies to executive team<br />
pay increases?’”<br />
Many large shareholders ultimately<br />
agreed with Ms Wright<br />
with approximately 28% of the<br />
Company’s proxy holders voting<br />
against the Company’s remuneration<br />
report on executive<br />
pay at the AGM. This is regarded<br />
as a ‘first strike’ and if it is<br />
58 JANUARY <strong>2024</strong><br />
The Local Voice Since 1991
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