The curious case of Mr Ahmed Fahour

As media and commentators are busy analyzing whether Mr Ahmed Fahour was pushed or he jumped, the crux of the matter is executive pay. Mr Fahour  resigned this week amid controversy over his $5.6 million pay-packet. ABC news radio  this morning (24 February 2017) dubbed him the ‘highest paid postman in the world.’  Prime Minister Malcolm Turnbull  commented that  the pay is excessive. Other political leaders such as Senator Nick Xenophon commented “that’s  a lot of postage stamps…” Senator Pauline Hanson was also disgusted with the pay-packet which consists of $4 million salary and $1.2 million bonus.

Whether Mr Fahour is a postman or not, he should be given the due credit  of turning around Australia post from last year’s $222 million loss to $36 million profit this year. This is no mean feat – an improvement of $258 million in one year!  So what went wrong with Mr Fahour?

There are always two sides of the argument. As questionable pay practices are abundant, there is also an element of jealousy when we talk about executive pay. The average citizen or the average shareholder is baffled  by CEO pay. It appears as a mystery why CEOs are paid so much. CEO pay process is highly complex. Firm size, firm profitability, firm growth, firm’s business risk,  and business complexity – all contribute to CEO pay.Besides, we need to value the talent and  the strategic leadership they bring to the corporation.

Whether we like it or not, although Australia Post is a government-owned entity, it has to make a profit, otherwise taxpayers would be subsidizing its operations. And Australia
Post has to survive in a world of  digital disruption where we are increasingly abandoning the tradition ways of communication (‘snail mail’), thus adversely affecting postal business. If Mr Fahour  had been the CEO of a public-listed company, he  would have no issue of receiving this pay-packet. Further, it  is wrong to compare his salary with other government executives or political leaders such as the Prime Minister because  company CEOs and political leaders (or government officials) have very different jobs.

While  there is legislation  such as the “two strikes” rule to  rein in questionable pay practices ( see Monem and Ng, 2013) in public-listed corporations, there is no similar regulation for government-owned entities which are expected to be self-sustained and economically viable. Hence, whether Australia Post is a government office like Centrelink  or a profit-oriented business corporation needs to be settled first.

One thought on “The curious case of Mr Ahmed Fahour

  1. In the 16th Century, the queen of Britain started Gold coins with Silver coins in the market. In the short period of time, no Gold coins were found in the market. The Great Economist Mr Gresham had been assigned to investigate. Mr Gresham gives his report. He states in the report the cheaper silver coins pushed out the gold coins. Relatively the same thing is happening in our politics. The silver coins in our politics like Pauline, Jackie could badly impact on our social life and development. I am sure that if Pauline gets the position, the Australian Post will disappear. This type of politicians are unable to give better future except make the environment more toxic. The Australian Post could run now as Mr Ahmed’s way but real growth will go far way. We need to be aware about these politicians who are using toxic manifesto to win. In reality they are introducing the new form of “DIVIDE & RULE” to enjoy the power and benefits. If needed, they may not dare to break the country in the name of race or religion. May God save us. Long Live Australia

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