[BlacKnox]

Virgin bosses seek pay rise
from: The Australian
http://finance.news.com.au/story/0,1...14-462,00.html

By Steve Creedy
02-02-2006

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VIRGIN Blue's directors will next week seek a 33 per cent pay rise in the face of union claims that employees have been underpaid.
The airline's shareholders will be asked at the annual meeting in Brisbane next Tuesday to approve lifting the aggregate amount paid its non-executive directors from $750,000 to $1 million and for the board to be expanded by at least one director.

The move comes as Virgin Blue (vba.ASX:Quote,News) has been directed by the Australian Industrial Relations Commission to start negotiations with the Australian Services Union over an underpayment claim, which could cost it as much as $1 million.

The ASU claims the members are owed the money in unpaid shift allowances because they were paid penalty rates on the basis they were working 7.6 hours a day when they actually worked eight.

The airline's annual report shows the salary, fees and superannuation benefits earned by its eight non-executive directors in 2004-05 ranged from $36,250 to $213,000.

Managing director Brett Godfrey's package, including options, topped $4.3 million.

Virgin Blue argues the current limit was set at a time when no regard was given increasing the number of directors.

"Having regard to the increasing complexity of the business, the board has formed the view that it was appropriate to increase the number of directors," Virgin says in its notice of meeting.

"Your directors believe the increase in the number of directors better enables the board to exercise an appropriate level of oversight of the company's affairs on behalf of the shareholders," its says.

"While no decision has been made on the final number of new directors, the directors' view is that an increase of $250,000 in the maximum amount of fees payable ... will enable the board to attract and retain directors of a calibre appropriate to the needs to the company."

Asked about the mooted board expansion, a Virgin spokeswoman yesterday pointed to a section of the airline's annual report which talks about replacing former board member David Ryan, who resigned last April.

The report says the board has been unable to find a replacement but is "actively seeking a to appoint a suitable independent non-executive director".

Executive compensation has been highlighted as an issue by unhappy workers during enterprise bargaining negotiations between the airline and the Transport Workers' Union.

"They talk a lot about making the air fair, what about on the ground?" said one source.

Virgin is offering the TWU annual rises of 3 per cent over three years with a link to the consumer price index in the third year to allow an increase of up to 4 per cent.

The airline has told unions that it sees no legitimate basis for the shift allowance claim being pushed by the ASU.

Virgin shares yesterday closed up 2 cents at $1.70, despite a downgrade from Credit Suisse First Boston from outperform to neutral.
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[Lindsay Wilson]

approve lifting the aggregate amount paid its non-executive directors from $750,000 to $1 million and for the board to be expanded by at least one director.

Anybody who reads this closely will see that they want to expand the Board of Directors by one (and they already have one vacancy); thus there are two Directors they are seeking, at least one of which will be a non-executive (but possibly both).

This increase in emoluments means there is additional funding for the additional non-exec Director. Plus it is very important to realise that people like Brett Godfrey are not receiving additional increases.

As to whether the ASU members have a claim, well, that's probably off to the Courts if they can't get a mesiated settlement. 0.4 hours per shift, per person, per day sincethe start of the disputed period, is probably a decent amount of $$'s.

[BlacKnox]

Good pick-up Lindsay Wilson. I thought about highlighting the article as such:

Originally Posted by BlacKnox

The airline's shareholders will be asked at the annual meeting in Brisbane next Tuesday to approve lifting the aggregate amount paid its non-executive directors from $750,000 to $1 million and for the board to be expanded by at least one director.

But then again I thought anyone interested would read it closely and understand the difference. Not a scholar hey