RETIREMENT benefits paid to three former AWB Limited directors do not seem to pass the "smell test".
As reported by The Weekly Times last week, former AWB chairman Brendan Stewart was paid $225,000 last financial year, while his board colleagues Brendan Fitzgerald and Steve Chamarette received $120,000 each.
The issue first raised its ugly head at the AWB annual general meeting a fortnight ago when board candidate Stephen Mayne made statements about the "ex gratia retirement payments" to the three former directors.
Mr Mayne said company directors normally only got paid fees.
He pointed out that paying bonuses on top of the fees could compromise their decision making as a director.
When West Australian shareholder and former director Colin Nicholl - who did not receive a retirement benefit - asked what the three directors received the payments for, a clearly agitated AWB chairman Peter Polson said it was for "services they had provided to the company".
Mr Mayne then said it was unusual for a former chairman to receive a six-figure ex gratia payment and asked whether it was made about the time of the company's restructure in late 2008.
Mr Polson replied: "The two issues are not connected at all.
"The decision at the time was made to make those payments based on the services being provided by those directors over a period.
"That's the answer to the question. If you don't like the answer, then I am afraid I can't give you another one."
So that was it: a payment based on past performance.
But at another point in the meeting, Mr Polson said it was also because the three directors also had their terms cut short.
Indeed, the note in AWB's 2009 financial report said the retirement benefits "were paid to the three directors who retired from office before their terms had expired as a consequence of the adoption of a new constitution by shareholders in October, 2008".
Mr Fitzgerald said the payments were made after February 10, 2009, a point following his and Mr Chamarette's departure from the AWB board.
"It came as quite a surprise to us," he said. "There was nothing underhanded."
The payments came after a sensitive time for AWB.
The company held meetings on August 21 and September 3, 2008, in a bid to rid grower control from the board amid stiff opposition from some directors.
Shareholders voted in favour of constitutional reform on September 3 and a further meeting was held on October 22, 2008, to vote on a new constitution.
Mr Stewart voluntarily stood down from the board on October 22, 2008, immediately after shareholders approved a new constitution.
Mr Stewart said as early as the previous AGM in February, 2008, that he would resign from the board once constitutional changes came into effect.
In fact, all A-class grower-elected directors were required to stand down once the new constitution came into place on October 22, 2008.
Four "dissident" directors - Xavier Martin, Russell McKenzie, Rodger Schirmer and Mr Nicholl - all resigned on September 8, 2008.
Mr Fitzgerald and Mr Chamarette were allowed to continue until the next AGM on February 10, 2009.
If Mr Stewart had not stuck to his word and quit in October 2008, he, too, could have stayed on until February 10, 2009, but not longer than that as his three-year term would have ended.
He voluntarily left the AWB board 111 days before his term expired and for that, it seems, he received $225,000.
Mr Martin voluntarily left the board 155 days before he was due to retire but received no payment.
Mr Nicholl, Mr McKenzie and Mr Schirmer still had two more years to go if they did not leave the board of their own volition. They were not paid a cent.
Mr Chamarette's three-year term was cut short by a year and for that, he was paid $120,000.
Where AWB's explanation of the retirement benefits seems unclear is with Mr Fitzgerald. His term was due to expire on the exact day he did retire: February 10, last year.
The Weekly Times repeatedly asked AWB for an explanation of why he was paid a retirement benefit if he quit on the day he was supposed to.
Corporate Affairs general manager Peter McBride justified it by saying Mr Fitzgerald had planned to nominate for another three-year term and could have done so if the old constitution was in place.
So was he paid to not stand for another three years? It doesn't seem to make sense as the old constitution was dead and buried four months earlier and everyone knew the new rules.
AWB's explanations also didn't make much sense when The Weekly Times spoke to Mr Chamarette.
He said his payment was not to compensate him for retiring earlier than this term. "That's the first I've heard of that. I was keen to go anyway," he said.
But if, as Mr Polson told the AGM two weeks ago, directors were paid for their "service to the company", why wasn't Mr Martin paid a similar sum? He served on the AWB board as long as Mr Fitzgerald and a year longer than Mr Chamarette.
The Australian Securities and Investment Commission needs to thoroughly investigate the payments fully.
