Tower spin-off boss to be paid for profit

Profitability rather than share price will determine the bonus payable to Australian Wealth Management’s new chief executive and managing director, Andrew Barnes, who has been offered a contract until the end of 2007.

While the details of the performance hurdles facing Barnes are confidential due to their potential to guide the market, the group’s new boss and board member said they required a “substantial” increase in net profit after tax.

A healthy profit improvement could see Barnes as much as double his $450,000 annual salary. Shareholders have also been asked to approve an award of 2.2 million options to Barnes, exercisable at the group’s listing price of $1.00, although earnings targets have also been attached to the vesting of the options.

“Our share price is to some degree in the market’s hands…it’s the financial performance of the company which determines our ability to pay dividends to shareholders,” Barnes said.

Barnes was already running the wealth division of Tower Australia which included the Bridges Financial Planning dealer group and Tower Trust platform, before its February spin-off into a separate public company.

Apart from the financial planning and asset management divisions, Barnes said two new focuses for growth were in estate planning and private client trusteeship, as well as ‘Super Sonar’, which targets self-managed superannuants by vetting various external providers in the SMSF space, and aggregating them into a ‘one stop shop’ service.

Barnes said the recent drop in the group’s share price, from $1.20 shortly after listing to $1.02 currently, did not concern him as it represented an institutional shareholder unwinding an “extremely overweight” position.

“It will be after our half-yearly results that the market starts to take a firmer view of us,” Barnes said. The new managing director is entitled to one year’s base salary and any accrued entitlements should his contract be terminated.