Monday, June 15, 2015

New Zealand, the Banana Republic of the Pacific


The high salaries paid to CEOs in New Zealand are actually indefensible for a small Pacific nation. Our government sector heads earn much higher salaries than many equivalent sized institutions overseas and our CEOs of private companies and SOEs also do extraordinarily well. CEO pay increases averaged over 10% over the past year while workers were lucky to receive 3%. 

Our PM earns the equivalent of $280,000 US which makes his salary only $120,000 less than the US President and more than that of Cameron in the UK, Germany’s Angela Merkel and Shinzo Abe of Japan.

The Mayor of Auckland receives $180,000 US while the Mayor of New York (pop. 8 million) receives only $40,000 more.

The US Secretary of the Treasury earns $191,000 US a year while our NZ Secretary of the Treasury earns $431,000 US.

Nestle’s Revenue is ten times that of Fonterra’s and the salary of Nestles’ CEO is $9 million. If Theo Spierings’ salary was revenue based, he would only be earning around $1 million, instead he is earning $3.3 US million a year.

Considering our country only has the population of a reasonable sized city (internationally), we pay CEO salaries greater than those of most major economies. Something is seriously wrong with our values and we are rapidly looking like a banana republic.


3 comments:

Philip Todd said...

Its because greed is infectious and boards have fallen into the trap of pushing CEO's salaries as that reflects on their remuneration. Fonterra is the worst possible example and after a year of mismanagement and disasters they still pay him an extra 10%. Someone on 500K could have done a better job but they keep the doors firmly closed on anyone new getting into the ranks

bsprout said...

Philip, it appears that the management have forgotten that they are actually the employees of the shareholder farmers and the farmers have lost control of their their co-operative. http://www2.fonterra.com/our-co-op

Philip Todd said...

Yes but the shareholders are represented by the board they elect. Those board members get swallowed up in the hype. Its also interesting to watch the relationships between board members and CEO's. The later are appointed for their professional skills while the rest are elected because people feel they understand the farmers issues. The relationship is usually dominated by the CEO's who not only manage the business but also the board. The classic example our DHB where they think sacking the board will change things where sacking the management would bring faster and more relevant change.