Executive bonuses are determined in two parts, the individual component and the financial performance component.
The individual performance part of the bonus isn’t being paid as part of this cost-saving measure, and relates to non-financial performance factors such as management and safety sustainability, for example.
Executives can still collect performance bonuses for meeting the financial targets in their given divisions.
Wesfarmers could save up to $4.5 million from this measure.
The conglomerate had already put its employee share scheme on hold as a result of the Australian Government’s taxation plan on those programs.
Australia’s federal Government, as part of its recently unveiled budget, announced plans to tax employees up-front when they are granted share discounts, or options on shares, rather than when they take ownership of the shares, or sell them.
Mr Goyder said in his letter that he was disappointed by the proposal and that Wesfarmers planned to make “strong representations” to the Government about the matter.