
AWI CEO Stuart McCullough at the Australian Sheep and Wool Show in 2018.
AUSTRALIAN Wool Innovation has been called out for paying its former chief executive officer Stuart McCullough $479,531 in a termination payment and increasing director fees, as the levy-funded body seeks to extract a higher levy from growers in the 2024 WoolPoll ballot.
In October 2021, AWI announced Mr McCullough had been moved out of the CEO role to the international marketing role of chief marketing and innovation officer, but without a proper executive search and interview process.
AWI would not disclose the salary for the new position and an Australian National Audit Office report found that the board’s deliberations and decisions regarding the establishment of Mr McCullough as chief marketing and innovation officer were not documented in the board’s minutes.
In April this year, AWI said Mr McCullough had been made redundant — ending the controversial 30-month overseas appointment — due to changed financial circumstances at AWI — lower than expected revenue — and the successful completion of Mr McCullough’s secondment overseas.
AWI’s favourable treatment of Mr McCullough was widely criticised in the industry and labelled as an “abuse of power” by AWI by New South Wales wool grower Robert Ingram.
WoolProducers Australia chief executive officer Jo Hall today said she has been informed that the $479,531 termination figure reported in AWI latest Annual Report has been paid solely to the former chief marketing and innovation officer position that has been made redundant.
“The pay-out figure seems extraordinarily high, and it is unclear from the annual report if that figure included the salary for Mr McCulloch during his six months’ notice period or if that is on top of his salary for that period of time,” she said.
“This role of CMIO that was created for Mr McCullouch has always lacked transparency and rigour and was noted by the Australian National Audit Office who examined the AWI board meeting papers during the second half of 2021 when the role was created and found that the AWI board’s discussions and decisions regarding the establishment of Mr McCullough as CMIO were never documented.
“At a time when wool growers are doing it exceptionally tough with low prices and increased costs, this figure seems hard to justify,” Ms Hall said.
Ms Hall said the 2023-24 Annual Report also indicates an increase in the total remuneration figure of the AWI board that increased by $22,271 to a total of $ 754,791.
“While this might not seem a lot over the seven directors and could be attributed to an inflationary increase, unfortunately wool growers aren’t afforded the same luxury when it comes to the wool prices they have received over the past 12 months.
“This is also on top of the fact that the AWI Board are paid comparatively higher than other RDC directors.”
Although AWI has said a vote to retain the current 1.5percent levy in the 2024 WoolPoll ballot is a vote for a significant cut in programs and it is seeking an increase to a 2pc levy, the AWI board has not offered to cut director fees.
An AWI spokesman said the $479,531 figure does not include the salary for Mr McCulloch during his six months’ notice period.
The spokesman said the AWI board asking growers to give it more money via WoolPoll and the increase in board directors’ fees were separate issues.
“The increase in board fees is based on CPI.”
The spokesman said AWI chairman Jock Laurie does not believe the AWI board has treated Mr McCullough with any favouritism during his departure from the CEO role to the CMIO role and his subsequent redundancy.
Board had to meet McCullough’s contractual obligations
Chairman Jock Laurie said the AWI board had to meet its legal and contractual obligations in regard to Mr McCullough’s redundancy.
“We’ve done that.
“We haven’t paid him one dollar more or one dollar less than what we owed him under those obligations and agreements,” he said.
“The figure is a lot of money, but Stuart has been the CEO for 11 years or something and with company for 23 years, so obviously there is going to be substantial long service leave and whole range of other things that he is entitled to and that’s the same as any employee.”
Mr Laurie said some conditions in Mr McCullough’s CEO contract were transferred to his CMIO role, including around his severance pay.
“We removed things like the short-term incentive, which probably cost $50,000-$60,000 a year.”
But when Mr McCullough was shifted into the CMIO role, he wanted to keep and transfer some of the provisions in his CEO contract.
“We were asking him to do something that was actually going to be pretty disruptive to his life, so we were prepared to support some of the things that he wanted and that meant that some of his conditions moved over.
“If he had turned around and he said ‘no I don’t want to go’ the company was obliged to meet those conditions anyway.”
Mr Laurie said in the past 4-5 years there have been times when the directors have capped their fees rather than take CPI increases.
“We’re trying to attract professional directors into the company, and we have two professional directors sitting in the company.
“They may certainly have expectations about getting properly remunerated for the expertise they are bringing to the board,” he said.
“And then you’ve got directors who are sitting on the board … that also have various levels of expertise.
“I think the industry has got to be prepared to look after the directors of any of these companies.”
Mr Laurie guaranteed that everything the directors are doing is directed at putting wool in a good light over the next few years.
“We’re requiring all the expertise that is sitting around that (board) table, but we are also very very conscious about what it is.”
Mr Laurie said AWI is attracting independent directors.
“To attract people to the company we’ve got to pay them to make it worthwhile for them.
“It’s a competitive environment, we have to do that,” he said.
“I understand where the (wool) market is, I understand all of that, but what we do need to do to operate in the best interests of the industry is to make sure we’ve got the best people we can get there.”
Mr Laurie said AWI is very conscious of the board fees and monitor those regularly.
“What we have been doing is restricting a lot of travel to make sure we are managing the cost of the board.
“So there has been a lot of stuff going on behind the scenes that people don’t see where we try to manage those costs … it’s all part of reducing the costs of running the company.”
In October 2022, AWI created an extra committee – the Marketing and Product Innovation Committee. The 11pc board director increase is due to the CPI, and for some directors their membership of the new committee and the work it entails. Sheep Central was told AWI board fees fell by 2.9pc in 2019/20 and by 12.4pc in 2020/22.
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