Close
 

What it costs to be the boss

  • News
  • June 30, 2015
  • Elly Strang
What it costs to be the boss

The NZ Herald released its CEO pay survey this month. Here are some of the retail-relevant results included:

  • Restaurant Brands’ Russel Creedy – earned $699,999 in 2014. Up from $669,999 in 2013.
  • Trade Me’s Jon Macdonald – earned $675,783 in 2014. Up from $554,510 in 2013.
  • The Warehouse Group’s Mark Powell – earned $1,510,000 in 2014. Down from $1,969,000 in 2013.
  • Xero’s Rod Drury – earned $395,000 in 2014. Up from $355,000 in 2013.
  • Z’s Mike Bennett – earned $2,060,000 in 2014. N/A in 2013.

Pay transparency is beneficial on many levels.

Using the survey, boards can assess whether CEOs are being paid accordingly in relation to their performance, while the public can assess whether a company’s workers are getting their fair share.

The latter is particularly significant, as the income gap between CEOs and their staff has become a contentious topic worldwide.

The Warehouse Group CEO Mark Powell commented about his large pay cheque last year.

“Whether it's too high, I'm not too sure on that. What I do know is it is... it is more than most people will earn ever,” he told the NZ Herald.

"And when you earn a lot of money you have a responsibility to think about that and that's where the word 'troubled' comes from.”

"Do I think I get paid a lot? Yes, I do. Does that trouble me? Do I think about that? Yes, it does."

Despite the concerns Powell raised about his pay, The Warehouse Group seems to be making a genuine effort to help its staff by prioritising their pay and career advancement.

In 2013, The Warehouse Group made sure all of its employees were bumped up to a living wage of $18.50 to $20 an hour.

The company has also launched a training centre earlier this year to ensure retail is seen as a solid career.

Over at Xero, founder and CEO Rod Drury isn’t the highest paid employee at his company.

According to Xero’s latest financial report, four people earn more than his remuneration of $567,000, with the highest paid employee earning between $1,570,000 and $1,579,999.

Out of the five examples mentioned, three got a pay rise from 2013.

Z CEO Mike Bennetts’ 2013 pay isn’t specified. The Warehouse Group’s Mark Powell was the only decrease in pay.

On average, all of the CEOs surveyed experienced an average 10 percent increase in pay.

Average yearly pay for retail CEOs and workers:



Infographic: Rupal Hira

Are they getting paid too much? Council of Trade Unions secretary Sam Huggard says they are.

“Many workers haven’t had a pay increase at all,” Huggard says.

"Despite the government saying inequality is falling, when we crunch the numbers they show that a sharp rise in inequality is due to a rapid rise in high incomes [of CEOs].”

The Shareholders Association chairman John Hawkins says it’s impossible to analyse whether CEOs are getting paid too much without having the full details.

“What the numbers do show is that some boards take a harder line and still have very successful CEOs,” Hawkins says.

“For example, Restaurant Brands’ Russel Creedy had a 4.55 increase in a period when turnover rose 9.25, net profit 19.4 percent and dividends to shareholders 15.2 percent.”

He says Mark Powell’s performance pay dropped 23 percent, as sales increased 4.7 percent but net profit dropped 48 percent.

But he points out it’s varied, as on the other hand, Trade Me gave John Macdonald a large pay increase despite profitability and share price being pretty flat over that time.

In comparison, Trade Me Jobs says the average pay for a retail assistant in New Zealand is $32,000.

Payscale.com says a retail sales assistant in New Zealand earns $15.05 an hour on average.

The Shareholders Association is keen to limit their CEOs’ base pay to more than 20 times the average wage of $54,700.

Chairman John Hawkins says this figure is a reasonable base figure for the CEO of a medium to large New Zealand listed company.

He says when there is a huge gap between the CEO and average worker pay, staff don’t see the situation as fair.

“Many workers have a great deal of responsibility in their jobs and resent someone they see as milking the system, whether or not that is a fair view,” Hawkins says.

“It does nothing for staff morale and can easily lead to reduced productivity and high staff turnover, not just on the shop floor, but also in mid-management.”

“Both situations are very disruptive and costly and shareholders themselves resent it when they see large increases in pay, but no corresponding increase in dividends or share price. After all, it is their money.”

He says the bottom line for shareholders is whether the CEO’s performance justifies the pay.

He says there’s plenty of evidence that high pay doesn’t equal high performance.

A study out of the US found the highest-paid CEOs are the worst performers. This was found to be true for both big and small companies.

“Some of the most successful companies worldwide as well as in New Zealand have relatively low paid executives,” Hawkins says.

“Equally, some of the poorest performing companies pay the most.”

“Boards need to take a tougher line and ask to see the results before committing to the really big numbers. And they need to ensure the performance measures they use are both straightforward and enforced.”

If there’s a pay inequality in New Zealand, it is tame when compared to the US.

According to the Bureau of Labor Statistics in the US, the average store assistant makes $21,410 per year, or $10.29 per hour.

PayScale echoes this and says the median hourly rate for a US retail worker is $9.

On the other end of the spectrum, a USA today analysis of data from S&P Capital IQ found 13 restaurant and retail CEOs make on average $US5859 an hour.

 It would take a staff member earning $10 an hour more than two months to pool together what the CEO makes in an hour.

Hawkins says CEO pay is relatively modest in New Zealand.

The average CEO remuneration is probably 15 to 35 times that of the average worker’s income, with a few outliers, he says. Most will be under 30 times the average pay.

“Australia runs from about 50x – 150x and the USA is now at about 300x, although it has been higher in the past,” Hawkins says.

The Green Party has made a call for large, publicly listed companies to disclose the pay gap between their highest and lowest paid workers as a way to justify the CEO’s pay.

Do you think CEOs are being paid too much? Share your thoughts below.

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 

Direct sales: How multi-level marketing works

  • News
  • April 18, 2019
  • Sarah Dunn
Direct sales: How multi-level marketing works

The $200 million-plus direct sales economy contains many lessons retailers can use. As part of a wider look at this thriving corner of retail, we created a quick explainer showing how this business model typically works.

Read more
 
 

Direct sales: Meet the upliners

  • News
  • April 18, 2019
  • Sarah Dunn
Direct sales: Meet the upliners

We profiled different participants in the direct sales industry to find out what retailers can learn from them. Meet Isagenix distributors Adam Nesbitt and Bianca Bathurst.

Read more
 
 

Direct sales: Meet the business builder

  • News
  • April 18, 2019
  • Sarah Dunn
Direct sales: Meet the business builder

As part of a wider story looking at what retailers can learn from the direct sales industry, we profiled Isagenix distributor Ben Frost.

Read more
 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 
News

Leveling up: Exploring multi-level marketing in New Zealand

Is the $200 million-plus direct sales economy retail by another name or something different? Regardless, what can we learn from it?

 
 

A spectrum of retailers

  • Opinion
  • April 18, 2019
  • David Farrell
A spectrum of retailers

In recognition of April being Autism Awareness Month, retail commentator Dave Farrell considers the role of those on the spectrum in retail.

Read more
 

How on-trend is your retail business?

  • Sponsored Content
  • April 18, 2019
  • Sponsored content
How on-trend is your retail business?

New insights from Visa highlight five evolving trends emerging from savvy retailers around the world. We’ve taken these global trends and looked at how they are playing out with merchants in New Zealand, and we’d now like to hear what you think of them.

Read more
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}