Forget about CPI, if you want to see real inflation, have a read through the remuneration reports of ASX-listed companies. Despite new legislation regarding termination payments, and far greater investor attention on executive pay, the same old offenders continue to pay their CEOs millions of dollars for under-performance. And while much media attention is devoted to the likes of BHP’s Marius Kloppers and CBA’s Ralph Norris, at least they can point to increasing in shareholder wealth — the same can’t be said for Tom Park, CEO of Paperlinx.

Park, who is stepping down as CEO at the end of this year to be replaced by Toby Marchant (the current boss of Paperlinx’s European business) has been lavishly rewarded for his efforts — sadly, shareholders cannot make the same boast.

Since his appointment in February 2004, Paperlinx’s share price has slumped by 90% — around $2 billion in shareholder value has been destroyed. Fortunately for Park, the Paperlinx board doesn’t too closely align executive pay with performance — in fact, there appears to be some sort of negative correlation. This year, Paperlinx lost another $225 million on revenue, which slumped by 25% — from continuing operations, Paperlinx lost $27.6 million. Despite the less-than-stellar performance, the Paperlinx board felt it appropriate to pay Park a bonus of $962,967 (Park also received base salary of $1.8 million).

In trying to explain how it could possibly have paid any sort of a bonus to a CEO who has presided over years of losses and a 90% slump in the company’s share price, Paperlinx claimed:

“Under the 2009/10 STI, NPAT/EBIT targets were not achieved … however, excellent cash flow management and divisional working capital sales led to a $310 million reduction in gross debt…the combined benefit of the sale of Australian paper, reduced working capital, improved cash management…and favourable currency have all led to a $1.2 billion reduction in gross debt from December 2008 until June 2010 and has been an important company benefit.”

It appears that despite the company reporting a massive loss, because the CEO sold off some of the family silver, and the Australia dollar moved in the company’s favour, he was deserving of almost a $1 million bonus for simply turning up to work and the business not entirely collapsing.

In total, over six years, Park has collected more than $17.7 million, almost all in cash. But even worse, this wasn’t even Park’s first instances of being paid for very little — he was previously CEO at wine company Southcorp for only five months. When the company was taken over by Bob Oatley in 2001, Park collected a $10 million golden handshake for his trouble. Lightning then struck a second time a few years later when Park was paid a $2.5 million redundancy after being told by New Zealand billionaire Graeme Hart that his managerial services were no longer required at Goodman Fielder.

Park noted in relation to Paperlinx’s woes:

“I’m disappointed, too, especially for my shareholders, and my options and bonuses are all marked down because it’s been so tough in this market and so tough for our stock. I think the company is very well positioned now to benefit our shareholders, and we have a much better mix of assets.”

It appears that Park’s optimism was somewhat misplaced. That comment was made in 2005 — when Paperlinx shares were trading at about $3. They are now $0.45.

While Park’s managerial ability is being questioned by investors, he can’t be blamed for his remuneration — there aren’t too many CEOs (or any employee for that matter) who refuses money. Instead, culpability must be directed at Paperlinx’s blue-blood chairman (and ex-officio Remuneration Committee member) David Meiklejohn. Chairman since 1999, Meiklejohn is a bona fide member of Melbourne’s Directors’ Club, sitting on the boards of ANZ Bank, Coca-Cola and the Melbourne Cricket Club (and previously, the board of National Foods, along with fellow Director’s Club doyen David Crawford). Another key member of Paperlinx’s remuneration committee is Jim Hall, who knows all too well about shareholder losses, having presided over the loss of billions of dollars of wealth as a director of Centro Properties Group.

*Adam Schwab is the author of Pigs at the Trough: Lessons from Australia’s decade of Corporate Greed