No pay freeze at the top

Written By: - Date published: 9:28 am, September 23rd, 2009 - 11 comments
Categories: business, capitalism, workers' rights - Tags: , , , , ,

It seems the trend of rewarding company bosses with extravagant pay rises regardless of performance isn’t limited to Telecom’s $7 million man, Paul Reynolds.

The Dom Post reports the bosses of Contact and Skellerup have been given huge pay rises, despite both companies’ profits taking a dive in the last year.

Contact’s managing director David Baldwin made an extra $117,000, bringing his total package to $1.6 million, despite a 50 per cent fall in company profit.

Contact’s share price has slumped from a peak of almost $9.75 early last year to just under $6 yesterday.

And Skellerup’s executive director Donald Stewart received a pay packet of $801,000 in the 2009 year, compared with $509,000 the year before.

Mr Stewart’s pay rise came as Skellerup’s net profit fell 37 per cent

Like we’re seeing with Paul Reynolds’ unbridled greed and Bill English’s housing allowance rorts, it’s one rule for those at the top and another for the rest of us. We shouldn’t tolerate it.

11 comments on “No pay freeze at the top ”

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  1. kaplan 1
    23 September 2009 at 10:03 am

    It truly amazes me that so many people can be either blind to this complete hypocrisy or just simply willing to tolerate it.

  2. rainman 2
    23 September 2009 at 10:19 am

    Well, what can be done about it?

    Seriously.

  3. StephenR 3
    23 September 2009 at 10:25 am

    Well, what can be done about it?

    Seriously.

    Indeed. This guy looks like he’s about ready to go storm the ramparts: http://www.stuff.co.nz/business/2412998/Reveal-debt-laden-companies-NZX-says 😀

  4. Ianmac 4
    23 September 2009 at 10:42 am

    Can any of the tax experts tell me if the Bonus is taxed in the same way as though it was just part of the salary? Otherwise why not just increase the salary?

    • ieuan 4.1
      23 September 2009 at 11:12 am

      I’m not a tax expert but yes a bonus should be taxed like a salary, that is if it is paid out as ‘cash’.

      Alternatively the bonus could be paid as shares or in another form.

      Why not part of the salary? I guess if the bonus is ‘at risk’ and only paid out under certain conditions (company profit > $xyz) then it provides an incentive. If it is not ‘at risk’ then that’s a fair question, it really is part of the salary package.

      I agree that these massive increases for the people at the top of these companies is a disgrace.

      What can you do about it? How about this…
      (i) Don’t buy their goods and services,
      (ii) Become a shareholder and go to the annual meeting to voice your concern,
      (iii) Protest outside the head office of the company,
      (iv) Do a ‘Michael Moore’ and make a documentation about the company.

    • snoozer 4.2
      23 September 2009 at 11:31 am

      cash bonuses are taxable income, just like salary.

      Bonuses are often used as a way of keeping permanent labour costs down. In the UK banks, for example, base salaries are quite low and their are huge salaries in the good years. In bad years they just cut the bonuses and if they have to fire people that’s cheaper as well because payments are worked out on salary.

      Of course, the problem is that for many CEOs bonuses are issued regardless of how well their company does.

  5. NickS 5
    23 September 2009 at 11:26 am

    Even wired on coffee these habits of companies increasing CEO’s etc salaries when profits are down doesn’t make much rational economic sense. Though you could possibly rationalise it by the “value” attached to CEOs etc in order to retain them, which in turn then raises questions about the rationality of the values attached to them.

  6. Mach1 6
    23 September 2009 at 12:03 pm

    John Ralston Saul has lots to say about corporate greed in The Unconscious Civilization

  7. Darien Fenton 7
    23 September 2009 at 12:53 pm

    And this on the day cleaners are protesting about their lousy pay of $12.55 an hour.

  8. Jared 8
    23 September 2009 at 11:19 pm

    There is a reason why executives at top corporations are paid large salaries and bonuses. Because unlike cleaners, there is a finite market for good leaders and managers, and especially with large organisations with Staff in the many thousands, Organisations are competing on the international market for competent executives. Basic Supply and Demand theory would dictate that when Demand exceeds supply, factors like pay dictate where the individual will go. In otherwords, you pay peanuts, you get monkeys. But in an international job market with executives constantly being head hunted, it does cost quite a bit to keep talented leaders. A cleaner would hardly have the skills to do Paul Reynolds job, and is paid accordingly.