Westfield co-CEOs under fire over $18 million executive pay packets

Westfield Group's joint chief executives Steven and Peter Lowy have come under fire from two US proxy shareholder groups after they earned a combined 2012 remuneration package in excess of $18 million.

The two Lowy brothers were appointed co-chief executives in 2011 following the decision of Frank Lowy to assume a non-executive role.

Peter Lowy received a 2012 salary of $2.5 million – unchanged since 2008 – along with a $3.36 million cash bonus. Combined with equity and cash awards, his total remuneration was $8.91 million.

Steven Lowy received a 2012 salary of $2.5 million – unchanged since 2008 – along with a $4 million cash bonus. Combined with equity and cash awards, his total remuneration was $9.4 million.

Both salaries are expected to be endorsed by shareholders at Westfield’s AGM on May 29.

However, CGI Glass Lewis, which acts on behalf of US institutional investors, said the aggregate salaries paid to Steven Lowy and Peter Lowy was more than twice the median of the entity’s market index peers” according to reports in the Australian Financial Review.

CGI Glass Lewis questioned the need for such “significant” pay packages and demanded a “thorough and convincing explanation for such high remuneration” - as yet not provided.

Another US proxy investor firm ISS, a subsidiary of global investment advisory giant MCSI called for more clarity around long-term incentives, of which only 22 Westfield executives participate, including the co-chief executives are eligible.

Long-term incentives are awarded based on Westfield meeting certain performance hurdles, which if met are paid out in 2016 and 2017.

Despite their objections, both US firms have urged their investors to vote in favour of the remuneration report at its AGM on May 29.

Westfield is one of the top performing A-REITS, beaten only by Goodman Group and Lend Lease Group on a return on equity measure.

Since their appointment the co-CEOs’ remuneration has not been increased to reflect their new roles while no adjustment will be made to their remuneration in 2013.

Their base salaries have been frozen since 2008.

The Westfield remuneration committee re-weighted their pay packet in 2012, reducing their cash salaries with a corresponding increase in their deferred equity to be issued to them under the short-term incentive plan.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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