Asset sale will lead to more CEO pay hikes

The salary paid to the departing Meridian CEO is completely unjustifiable.  During a period when Meridian’s profits plummeted Meridian Energy former chief executive was paid $1.37 million, including more than $800,000 in bonuses.

Under the Government’s plans to privatise New Zealand’s state owned assets expect to see more news stories like this.

There have already been huge hikes in pay for the top executives at Mighty River Power in preparation for its sale.

Going hand in hand with big salary packages for those at the top we can also expect to see more job losses for ordinary workers at our state owned electricity companies.

At the same time as state owned enterprises management are being paid millions in bonuses workers are at Solid Energy were ‘rationalised’ to make the books look good in preparation for its sale.

It never fails to amaze how often Governments (normally of a centre-right hue) are willing to back astronomical salaries for those at the top of the food chain while slashing pay for those at the other end of the scale.

If top executives need to be paid top rates why doesn’t this flow on for other workers?

16 Comments Posted

  1. I agree with Kerry.

    The rock-star CEO, with very rare exception, is a complete myth. They are trying to tell us that if they cut the salary from $6M to $1M, the candidates would be rubbish? From $1M to 500K?


    Whilst a private company can offer whatever the shareholders are stupid enough to agree to, there is no excuse for high state CEO wages. It’s cronyism, pure and simple.

    They could pluck perfectly adequate talent out of the aspiring mid-manager ranks at significantly lower salaries. If those at the top think they can do better elsewhere, let’s see them go do it.

    It’s telling that Steve Jobs – who really was a rock star CEO – took share options, not a salary.

  2. Kerry – “Are you saying Labour was a left wing Government. Could have fooled me!”

    Anti-smacking and light bulbs -yes, they were left wing allright.

  3. The number of full time workers earning under $20,000 pa fell from over 250,000 to zero under Labour.

    And the number of workers whose pay took them into the top tax bracket doubled.

  4. The difference between now and then – in terms of paying top dollar to bureaucrats, is that Labour was not cutting staff numbers and trying to freeze wages and reduce conditions for the underlings at the same time.

    An interesting comment from Rodney Hide in the NBR – that the top bureaucrats were smarter than those in leadership in the private sector (well worth their pay).

  5. Are you saying Labour was a left wing Government. Could have fooled me!

    It is almost funny that the great elite managers require millions to motivate them to do their job properly, and stay in NZ.
    While skilled professionals and tradespeople, including Teachers, are expected to remain in their jobs while their pay is cut and their working conditions are made as unpleasant as possible.

    Just as well, for society, us lefties stay for reasons other than money. Eh!

    The star manager is a myth perpetuated by those managers and directors who make money, way in excess of their worth.

    How can wage rises of 60 to 100k a year for these people be justified at the same time as they claim workers pay needs to be cut so New Zealand can be competitive.
    Chasing skilled workers with rare skills overseas to get mangers who have little experience or ability to come here. We already have enough managers who have no idea how to build a business, whose only skills, are cost cutting and pissing off good workers.

    In fact in many cases it would be cheaper to pay those managers not to come to work.
    “One of the corollaries or supporting ideologies behind Neo-Liberalism is the cult of Management.

    The idea that individual shareholders, managers or directors are the main contributors to the success of a corporation, and thence the economy. And deserve the greatest share of the rewards. The jobs and income of all other employees and State servants is a generous charitable gift from these people.

    Except, maybe in the case of genuine entrepreneurs, we all know this is not true.

    Many corporations and State or private enterprises run despite management, not because of them. In fact the constant parade of new brooms trying to make a name for themselves, with rapid changes and cost cutting, cause competent staff to resign and demoralise the rest”.

  6. “and $182,266 in bonuses for long-term performance related to a three-year period,”….bonuses for pushing a hydro on the Mokihinui that DOC said NO to; to use a cliched expression – what side of NO didn’t he understand?….$18 million (the price of the mok consent process til cancelled a few weeks before it was due in the Environment Court) tossed like pearls to swine – this is the kind of stuff these CEOs get bonuses for – at least when the new CEO took over he saw straight away what a lost cause a hydro scheme on the mok was.

  7. dave stringer – I think you will find that, when push comes to shove, that some people will be more equal than others in the brave new world.

  8. Lets be clear; this proposed sell off, of the power companies can only result in one thing.. slashing of services, maximizing of profits & salary increases for the Exec. In addition the employees wages & conditions will likely suffer also.

    Anyone who believes the Key-party’s rhetoric about making them more competitive etc. Is just spin to try & fool us that its in ALL our interests to go ahead.. WRONG !


  9. I guess we should all earn the same then, eh Frog?

    What say you for a mandatory wage, $15 per hour or $55 ?

  10. fin says “So “it’s a real problem”. Can you eloborate on that? Is it the 1% thing?”

    The public service including tertiary has over 10,250 people on six figure salaries out of 56,000 (36,000 public servants and 20,000 tertiary education staff).

  11. fin asks “Back on topic, do you think $800,000 bonuses are justified to a CEO whose profit plummets?”

    No. But trying say the problem is because of privatisation (and right-leaning governments), merely diverts what is a real problem into political stone throwing.

    The massive increases in civil servants on six figure salaries during in the 2000s was totally unsustainable and not because of the things frog blames – right wing governments or privatisation.

    While small parties support those huge increases under one government, and criticise them under the next – nothing will change.

  12. @ Photon, How does “normally of a centre-right hue”, equate to “ignor[ing] unbelievable increases under Labour”?

    Back on topic, do you think $800,000 bonuses are justified to a CEO whose profit plummets?

  13. frog says “It never fails to amaze how often Governments (normally of a centre-right hue) are willing to back astronomical salaries for those at the top of the food chain while slashing pay for those at the other end of the scale.”

    To blame right wing governments for this, you have to ignore the massive increase in six figure salaries under Labour (both in $ terms and numbers of people on them).

    For example, from 01-09, those on public service salaries on $100,000-$110,000 increased over 500% from 225 to 1230.

    And the 110,000-200,000 band also went up over 500% from 597 to 3172

    Those on 200,000-270,000 went up over 1000% from 26 to 294.

    In the tertiary education sector (which is measured separately) those in the 100,000-200,000 band also went up massively to 3375 people (around 500% increase from 2001).

    Those above $200,000 salary went up over 2000% from 8 to 163.

    So if you honestly beleive this is a problem, why did you ignore unbelievable increases under Labour?

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