Departing Wotif CEO Robbie Cooke has used his final AGM to announce that the company is finally lifting its base commission rate from 10% – something he has repeatedly said Australia’s biggest online retailer would never do – while indicating that revenue for the first quarter of the 12/13 financial year will show no growth over last year, precisely the issue Wotif has faced for the past couple of years.
As a result, Mr Cooke said the commission would increase 1% from January 1, 2013, followed by a further 1% lift a year later. It’s a move many industry commentators believe the company should have made years ago to keep pace with international peers charging supplier commission up to 25% or even 30%, giving them far more to invest in marketing, technology and innovation.
Mr Cooke said: “The increased commission is necessary to enable us to continue the reinvestment in our business on initiatives necessary to drive sales performance for our partners and acknowledges that we are operating in a global marketplace.”
Understandably, Mr Cooke made no references to past statements on the issue. Analysts believe the commission boost will have little or no impact on supplier relationships.
Meanwhile, Wotif Chairman Dick McIlwain addressed the issue of staff remuneration at Wotif, where senior employees (apart from Mr Cooke) are paid significantly less then their counterparts at peer companies such as Webjet.
For example, recent annual reports from both companies reveal that the top five employees at Wotif, with the exception of Mr Cooke, who received $1.24 million, were paid between $223,139 and $350,154 for the 11/12 financial year.
It is important to note that the $350,154 wage is an outlier – the other four senior employees were paid in a tight band between 223k and 267k.
Meanwhile, the top four executives at Webjet (excluding MD John Guscic) received $339,356, $355,576, $444,500 and $594,500 respectively over the same period. Mr Guscic was paid $955,209 for the year.
Interestingly, executive pay at both companies lagged the wages paid by traditional travel retailers Flight Centre and Jetset to its ‘key management personnel’.
At Flight Centre the wage band for top staff ranged from around $600,000 up to $1,187,000.
Executives at Jetset, a company much less profitable than Flight Centre, Wotif or Webjet, were paid between $428,000 and $1,349,759.
Mr McIlwain commented: “The Company is changing and we also need to deal with the relevance of reward systems for staff. This requires more than just measuring financial performance and hoping that equity grants benefit from financial performance in future years.
“Our remuneration programs need to recognise innovative thinking and creative ways of better managing the enterprise to ensure we stay ahead of the competition.”
Mr Cooke will leave Wotif at the end of this year to take the role of CEO at Tatts.