Rock stars

It has been a good year to be a wealthy executive, particularly when your employer is in the resources business.

Anyone with any doubt about the two-speed economy need only look at this year’s BRW Executive Rich list. Of the 200 executives and senior managers on the list, 81 are from resources and mining services companies. This is up from 56 last year.

The wealth of those resources executives who reappear this year after making the 2010 list rose by 29 per cent. Those from non-related sectors had to make do with a 3 per cent increase. The total wealth of Australia’s 200 richest executives rose by 6 per cent this year (excluding valuation revisions). The All Ordinaries index was up about 1.5 per cent over the same period. Half of this year’s debutants are involved in mining: further evidence of the economic shift.

The Executive Rich list provides a unique insight into the people charged with running the nation’s most prominent businesses. It is made up of the wealthiest 200 executives and senior managers of the top 500 companies on the Australian Stock Exchange.

List members are ranked by their ordinary shareholdings in the company (or companies) they manage. The list aims to shed new light on the country’s richest bosses. Non-executive chairmen and non-executive directors are excluded from consideration. Only those who are actively involved in day-to-day management activities are eligible.

Fittingly, a mining boss sits on top. Andrew Forrest’s story is well known. The Fortescue Metals Group chief executive has made his fortune from iron ore in Western Australia’s Pilbara region. His $6.2 billion fortune sits above all other executive fortunes this year but is still down on his $8.4 billion result from the 2008 edition of Executive Rich. A legal battle with the Australian Securities and Investments Commission may pose the biggest threat to his title as Australia’s richest executive.

A colleague of Forrest’s, Peter Meurs, has $48 million worth of Fortescue shares. Meurs is an interesting case. He appeared on the 2010 list with $182.5 million but that was due to his shareholding in engineering giant WorleyParsons, which he left in April last year.

The highest debutant is Ten Network Holdings’ chief executive Lachlan Murdoch who becomes the third Murdoch on the list after his father and last year’s number one, Rupert, and his brother James, who runs News Corporation’s Asian and European businesses. Lachlan’s time on the list is likely to be short; his temporary occupation of the chief executive role at Ten is expected to end in July when James Warburton takes over permanently.

James Packer has already left his non-executive role at Ten Network Holdings. But he still has his managerial responsibilities at Crown and Consolidated Media Holdings. Packer is unique among the Executive Rich for having executive fortunes at more than one company simultaneously.

The biggest rise in percentage terms was achieved by another unique character, Silviu Itescu. A scientist by training, he heads Mesoblast, which carries out adult stem cell research. Itescu’s wealth rose by 535 per cent to $460 million this year.

Most of the big falls in wealth are due to a revision in the way they are assessed or because of share sales. Some of those to suffer big falls due mainly to a decreasing share price include retail kings Julian Tertini from Fantastic Holdings (down 34 per cent) and Harvey Norman’s Gerry Harvey (down 24 per cent).

Outgoing Westfield Group executive chairman Frank Lowy suffered the biggest fall in real terms. His executive wealth is down by $410 million to $1.8 billion but he remains in the top five.

Only four women make the list. Leading the way are the chief executives of Harvey Norman, Katie Page, and Westpac Banking Corp, Gail Kelly, then Paladin Energy’s company secretary, Gillian Swaby, and Origin Energy’sfinance director, Karen Moses.

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