Reading Tuesday’s Bay of Plenty Times, I was shocked to see the level of pay to both Mark Cairns at the Port of Tauranga ($1,464,000), and Vince Hawksworth at Trustpower ($1,359,999). In my opinion these levels are obscene, and reflect poorly on the governance by the Board of Directors concerned. Don’t get me wrong, because I greatly respect the leadership that both Mark and Vince have shown for their respective companies.

The Board of Directors approve the Chief Executive’s salary… but a salary (albeit it including performance bonuses) that is over $1,000,000 in New Zealand, is excessive. I am not against competitive salary rewards, but… Directors will argue that you have to pay these amounts if you want to get top CEO’s. This just isn’t true. We are a small country, filled with innovative and talented leaders, and there is plenty of competitive tension for these top jobs. Unfortunately, we have bred a culture of corporate greed that the average Kiwi just can’t relate to.

Let’s look at Port of Tauranga. This is truly a great company. It has a great strategic vision, and appears incredibly well run. It has grown huge shareholder wealth consistently over the past 20 years, and because of its location is likely to become one of no more than two major hubs for NZ Inc’s future export trade. This is likely to see Port of Tauranga’s net income rise substantially (probably double digit growth annually over the next ten years). The question is “how much of this growth can be attributed to the leadership of the CEO?” Certainly it won’t happen if the strategy isn’t executed effectively, but the strategy to get the Port positioned to take advantage of future port reform has had a long gestation period, and shouldn’t just be credited to the 2015 Management team. This has been a long term strategy that appears to be playing out nicely. So the question is, why should the CEO’s salary package be overly linked to this growth. Will the Directors justify a $3,000,000 salary (in say 5 years time) based on the achievement of this strategy. I hope not. Yes, incentivise performance, but please (Directors) be realistic so that average Kiwis aren’t aggrieved by these outrageous CEO salaries.

If you have a view on these or any other local government issues, I invite you to email me at andrew@vond.co.nz , or visit www.vond.co.nz