Australia Post's chief executive Ahmed Fahour resigns after pay row

The chief executive of Australia Post, Ahmed Fahour, has quit after a dispute with the Turnbull government about his $5.6m remuneration package.

Sources told Guardian Australia that Fahour was told by the government this week that he could remain in his job if he agreed to cut his package from the current level of $5.6m – or if he refused, action would be taken against the Australia Post board.

Fahour’s remuneration has become a matter of significant political controversy in recent weeks, with the prime minister, Malcolm Turnbull, making it clear he had spoken to the chairman of the board to register the government’s disapproval.

The chairman of the Australia Post board, John Stanhope, confirmed in a statement issued on Thursday that Fahour had tendered his resignation at Wednesday’s board meeting.

Fahour has been in the role for seven years, and will leave the organisation in July. Stanhope said Fahour’s legacy as CEO would be felt for many years to come.

“By any measure, Ahmed has done an astounding job in transforming the business,” Stanhope said in a statement.

He said with the business “entering the next phase of its transformation, Ahmed’s decision to resign provides opportunity for a new leader to continue the development of Australia Post into a leading international e-commerce player.”

Fahour confirmed his departure to reporters while confirming the organisation had made a profit of $197m before tax in the first half of this year.

“We are now solidly back in the black and this reflects an incredible effort by the team to achieve this result,” the chief executive said at his press conference in Melbourne.

The half-year result confirms the postal business broke even, and the parcels business increased market share.

Fahour noted Australia Post “was a very large organisation with a very large footprint” – and he made a less than subtle dig at the One Nation leader, Pauline Hanson. “It is fair to say it is a little bit more complex than running a fish and chip shop.”

Fahour has been under intense political pressure since the total value of his remuneration package was revealed last month.

Hanson launched a particularly strong attack on Fahour, describing his salary as disgusting, and declaring the board of the organisation was “weak and lost.”

Turnbull made it clear earlier this month that he had complained to the Post board chairman about Fahour’s remuneration, which triggered a public backlash.

Fahour denied that the political outcry over his package, and the subsequent criticism from the government, triggered his resignation statement on Thursday.

The chief executive said his departure was not linked in any way to a looming Senate estimates hearing once parliament resumes, where he was expected to face a grilling about a number of issues.

He said he had flagged to the board at the end of last year that he was beginning to contemplate life beyond Australia Post. “This thinking has been in the works for a while,” he said.

“I’ve had a pretty fair innings.” Fahour said chief executives needed to know when it was time to move on.

Asked whether the community outcry about his salary was reasonable, and whether he thought he was paid too much, Fahour said he recognised the issue of executive pay was a hot-button subject.

He said pay was not an “absolute” in a corporation, it was just another investment decision where boards weighed the merits of an investment in an executive versus the rate of return.

Fahour said people could look at the improvement in the performance of Australia Post and “make [their] own judgments about whether the return on investment is adequate.”

Pressed on whether he was paid too much, Fahour said: “I’m leaving, it’s up to you guys to commentate.”

Immediately after Fahour confirmed his departure, the communications minister, Mitch Fifield, said the government would in future require the pay and employment conditions of Australia Post’s managing director to be overseen by the Remuneration Tribunal.

Fifield said under the legislation governing Australia Post, the board was responsible for decisions regarding the terms and conditions of the managing director’s employment.

But following the changes, the board would be required to provide terms consistent with the Remuneration Tribunal’s determination for the employment of principal executive officer roles.

The communications minister said the existing PEO structure consisted of five bands, including terms and conditions that apply to offices in those bands.

According the Remuneration Tribunal’s website the most generous total remuneration band in the PEO structure is $332,700 to $610,370.

“The Australia Post board will need to demonstrate to the tribunal that their proposed remuneration package is commensurate with the responsibilities of the role,” Fifield said on Thursday.

He said the board had been advised of the government’s actions.