The Hardie boys quit with $10m
October 23, 2004
THE two James Hardie executives found responsible for depriving future asbestos disease victims of up to $2billion yesterday walked away with a $10million golden handshake between them.
In one of the most dramatic days in the long-running asbestos compensation scandal, chief executive Peter Macdonald resigned, taking away an $8.8million severance package.
The amount is 35 times the average compensation payout of $250,000 to an asbestos disease victim.
But Mr Macdonald and chief financial officer Peter Shafron, along with new Hardie chairman Meredith Hellicar, could potentially risk losing their personal wealth.
The asbestos compensation foundation they set up with insufficient funds yesterday threatened to sue them individually.
Medical Research and Compensation Foundation director Ian Hutchinson said Hardie must strike a satisfactory new compensation deal in negotiations with unions and asbestos victim groups within two weeks.
Otherwise, Mr Hutchinson told The Weekend Australian, the MRCF would lodge a statement of claim suing the Hardie group of companies, Mr Macdonald, Mr Shafron, probably Ms Hellicar and possibly some other directors and executives. "We're not bluffing," Mr Hutchinson said.
Aside from the payout, Mr Macdonald also holds options to 3.8million Hardie shares worth $23million on paper, though many of them are worthless at current share prices. He also has shares worth $2.6million, from which he won an extra $38,000 yesterday from the 9c rise in the company's share price to $6.15.
Mr Macdonald's departure came a month after a damning NSW special commission of inquiry found he misled the stock exchange and broke laws, which could put him in jail for up to seven years for his role in setting up the MRCF in 2001 without enough funds.
Mr Macdonald will continue to serve as a consultant to the company for an unspecified period of months, Ms Hellicar told a Sydney press conference yesterday.
Mr Macdonald, a highly successful CEO who championed the company's expansion into the US, raised profits fivefold under his tenure to $US125million ($170million) - ironically raising the prospects that Hardie can now pay the mounting asbestos liabilities it had cut itself off from.
Mr Shafron, who was found to have engaged in deceptive and misleading conduct for his role in setting up the MRCF, took away $1.2million.
Ms Hellicar said the payouts, including superannuation and other entitlements, were contractual and could not be taken back if either executive, presently under investigation, is found guilty of an offence.
The size of the payouts, and the fact that Mr Macdonald will still be at least partly on the company payroll, outraged unions and asbestos compensation groups.
"Hardies had plenty of means of separating themselves from their asbestos liabilities, but they have trouble with cutting the umbilical cords with their executives," said Asbestos Diseases Foundation vice-president Bernie Banton.
The company was still refusing to put up a concrete offer in negotiations, he said.
"They are like fleas - they jump from position to position and suck the lifeblood out of you."
Ms Hellicar said both Mr Macdonald and Mr Shafron would vigorously defend themselves against the claims of wrongdoing against them, as she would do if any were brought against her.
In another move to firing up the blowtorch on Hardie, NSW Premier Bob Carr, who said the payouts came on "a shameful day for corporate Australia", threatened new legislation against the company.
Mr Carr did not specify what he was planning, but it is understood the new law would force the company to meet its compensation shortfall.
The resignations will put the highly respected former NSW TAB executive Russell Chenu in the role of interim chief financial officer. Louis Gries, a US executive of the company, will become interim chief executive..
Ms Hellicar said the company was committed to finding a solution to the compensation shortfall, but indicated a return to a harder line in insisting on cutting out lawyers and saying that the company had no legal obligation to pay.
Legal experts have said that if successful claims are brought against the individuals, their indemnity insurance might not cover them.