While Phil Green and Babcock provided cover, Oz Minerals yesterday quietly announced one of the most disgraceful ex gratia payments ever seen by an ASX company.

While the quantum of Owen Hegerty’s ex gratia termination payment was far less than Chris Cuffe’s infamous $33 million payout or Rupert Murdoch’s US$30million salary, the audacity is stunning. Oz Minerals announced yesterday that Owen “Stronger forever” Hegerty will receive a payment equal to six months remuneration, together with statutory entitlements — the kicker however was that the Oz Minerals board:

… determined that it is appropriate to make an ex gratia payment to Mr Hegerty of $8.35 million. The ex gratia payment recognizes Mr Hegerty’s outstanding contribution to Oxiana’s growth and success over fourteen years since 1994 and his salary compensation in recent years relative to his peers.

One month ago, the Oxiana board humiliatingly withdrew a resolution which sought to pay Hegerty a $10.7 million golden farewell. As Oxiana noted at the time:

“It was clear to the board based on proxies which had been lodged prior to the meeting that shareholders would decline to support the payment to Mr Hegerty.”

Oxiana shareholders rejected the original termination payment to Hegerty on the grounds that it sought to pay Hegerty $5.4 million for options that hadn’t been issued and would have been near worthless anyway (courtesy of its collapsing share price). Instead of paying Hegerty $10.6 million, the Oz Minerals board led now by former Zinifex director, Peter Mansell, has turned around and given the former CEO $8.5 million anyway.

Of course, this isn’t the first time Oxiana has put the interests of former CEO Hegerty well before those of the shareholders who actually employed the former Rio executive.

In 2007, Oxiana infamously backdated Owen Hegerty’s options in a move, which according to Stephen Mayne “enriched the Oxiana founder by millions of dollars.” Oxiana had tried to bury the backdating in its 2007 Annual Report, with the swindle only picked up by a shrew corporate governance advisory firm. Had that happened in the US, Oxiana executives would be facing significant fines or possibly jail.

If backdating and huge ex gratia payments to Hegerty weren’t bad enough, the man who coined the term “stronger forever” engineered what is fast becoming one of the worst mergers corporate Australia has seen in decades (even worse than Foster’s Southcorp debacle). At the time Hegerty came up with the ingenious idea of merging Oxiana’s copper and gold assets with Zinifex’s zinc assets, Oxiana was trading at $3.30 per share.

Fast forward five months and the new company, Oz Minerals, is currently $1.79 per share. While some of the 45 percent drop would have occurred anyway, much of it has been caused by the flailing zinc price (gold and to a lesser extent copper have held up reasonably well). In fact, for the June half, the assets contributed by Zinifex to Oz Minerals actually made a loss courtesy of the falling zinc price.

There is no way a private company would pay an executive who led it into a value destroying merger an $8.5 million golden goodbye and allow him to stay on the board. Then again, other people’s money is always a lot cheaper than your own.