Partially Privatised Power Companies Chief Executives’ salaries surge

Written By: - Date published: 9:00 am, November 5th, 2014 - 13 comments
Categories: assets, bill english, class war, Economy, energy, national, privatisation - Tags:


Surprise surprise.

The Herald is reporting that Chief Executive remuneration for the recently partially privatised power companies has surged post float.  The chief executives have done very well.

New Mighty River CEO Fraser Whineray appears to have received a modest improvement although it is not immediately clear how much he will actually be receiving.  He is on a base salary of $850,000 with an at risk component worth up to 35 per cent of that salary and share packages worth up to $200,000 a year.  The 2014 annual report stated that the Chief Executive’s base salary for FY2014 was $1,074,244. As part of the Company’s annual remuneration review process in July 2013, this increased from $934,125.  If Whineray achieves the full at risk component he will receive $1,147,500 together with bonuses and shares.

Meridian CEO Mark Binns has done well.  He has gone from an annual salary in 2013 of $1.1 million with no bonus payments and $42,000 in KiwiSaver contributions to a base salary in 2014 of $1.1 million, a bonus of $690,000 and KiwiSaver contributions of $71,500. He has since received a further bonus payment of $740,000.

Genesis CEO Albert Brantley has not done so well.  He has gone from a 2013 salary package of $1.35 million to payments of $1.3 million in 2014 including a base salary of $921,000 and bonus of $334,400 and KiwiSaver contribution of $50,235.  His board will decide next year if he gets a one-off bonus payment of $300,000 for managing the transition to a publicly listed company. The way these things go the bonus is almost inevitable.

Mighty River Power CEO Doug Heffernan has seen his income surge.  No wonder he was so afraid of Labour’s Power policy.  Providing at cost power from power stations the state had built and paid for would have threatened his very comfortable salary.  He went from earning $1,200,894 in 2013 to a total of $2,184,828 in 2014 including a base salary of $1.1 million, a bonus of $447,000 and a one-off $500,000 retention payment for agreeing to stay on until August 2014. He also received $64,721 in KiwiSaver payments.

Bill English claims that it is up to the boards to decide on remuneration, but the increases reflect “commercial market rates for CEOs”.  Funny that.  I thought the mixed ownership model meant that the state retained control over these sorts of issues. He was quoted as saying:

I think it shows that when they were SOEs they were paid significantly below the market rate.

I think it illustrates that now the companies are partially floated there’s a lot more scrutiny on the performance of the chief executives. They do have to be on their toes. They’re under tougher scrutiny to perform.”

This claim about the innately superior ability of the market to instil increased corporate discipline is a myth.  The directors are mostly the same.  The CEOs are mostly the same.  The companies are using power generating assets built up by the state.  Fundamentally nothing has changed and if the scrutiny was previously more lax this is a reflection on English and his fellow ministers, not the ability of the state to actually manage something.

But now we have a situation where a significant amount of the dividend stream is paid to private interests, many based overseas.  And chief executive pay levels have gone from the stratospheric to the extreme.

13 comments on “Partially Privatised Power Companies Chief Executives’ salaries surge”

  1. cogito 1


    Marie-Antoinette famously put it this way: “let them eat cake”…. and she lost her head.

    One day these guys will find themselves equally reviled.

  2. les 2

    it is hard to justify these remuneration levels by any measure.The standard ,this is the going market rate for this sort of executive talent is hilarious.

  3. Sanctuary 3

    Being CEO of a power company in NZ must be the easiest gig in town. They are a cartel, and every CEO knows he or she won’t be around in 5-10 years so you don’t have to worry about anything at all.

    My plan as CEO:

    1/ Defer maintenance
    2/ Order a round of redundancies
    3/ Defer building that new dam
    4/ Jack up the price of electricity

    Where do I collect my cheque?

    • BassGuy 3.1

      Just remember, if we don’t offer them insane salaries, they’ll go elsewhere and we won’t get someone who is as good at fleecing the populace for electricity generated by hardware they already paid for.

      It has always puzzled me that competition drives wages and salaries down for the general public, but when it comes to higher levels, competition drives the wages up.

      Might it have something to do with WINZ compelling people to accept whatever job they might be offered and if the negotiations don’t result in a job, that’s the seeker’s fault not the employer’s?

  4. Colonial Rawshark 4

    Let’s see this for what it is. A personal reward to lackeys doing the bidding of financial capital and not derailing National’s asset sale plans, to the direct detriment of 95% of NZers (and the long term detriment of all NZers including themselves).

    Without its well paid executive servants, the oligarchy could not function.

    The sick thing of course is that none of these CEOs was short of money to begin with. They each were already well into the top half of the top 1%. But this is the corporate sickness – the only word they understand is more, more, more.

  5. adam 5

    These wage/salaries are nothing more than ritualist shows of fidelity. It’s like the strong man getting his two chickens and a cow – nothing changes, those in privileged demanding the rest of us pay them their tribute.

    Corporatocracy a sure sign society is taking the great leap backwards.

  6. millsy 6

    It would be interesting to compare the salary of the Genesis CEO with say, the salries of the old General Managers of the NZED and the power boards…

  7. sir pat 7

    we are indeed in a land of plenty…….if you are in the 1%……

  8. Revolting 8

    You wonder, if sometimes if the surveillance state is strengthened in order to keep the prols (not ISIS) under control.

    The status quo, is the way to go, keep the CEO wage exponentially high and the workers low,

    Its like eating a chicken sandwich, foul…(yeah cage feed one, with no feathers and pumped full of hormones, and legs not washed)

    When you look for objective/scientific studies (see below) that basically say, we have no idea if this CEO compensation has a positive or negative effect on company productivity…. Does not the “average man/woman” think Fxxk right off?

    Yes, its hard to measure some of these KPIs but really, there are phalanxes of competent men and women who could do the job equally as well (yes I know there is the oddity like Steve Jobs but we don’t have them in NZ). Maybe, its their politically orientation (i.e. privatise for the corporates) or ability to suck up that is the final call on the perception of value.

    Its so out of whack one has to ask the question, why would one not want to revolt against this shit.? If you cant measure it, how can you justify it?

    “The literature provides ample evidence that CEO compensation and portfolio incentives are correlated with a wide variety of corporate behaviors, from investment and financial policies to risk taking and manipulation. Arguably, the widespread use of incentive compensation and the large cross‐sectional differences in managerial contracts would make little sense if compensation had no effect on CEO behavior. However, because compensation arrangements are endogenous and correlated with many unobservables, measuring their causal effects on behavior and firm value is extremely difficult and remains one of the most important challenges for research on executive pay.”

    Also take a look at this lot, ask yourself, are they really that good… How could one measure… it who fucken cares….your in if you tow the line.

    Also, if that does not give you a sick feeling after quaffing down that load of chicken Mc Bullshit, take a look at this, a softening up of the state sector for more privatization, with overpaid CEOs that parrot the Nats meme…..

    “And more so in New Zealand than almost anywhere else, it seems. The chart below, from the OECD’s Government at a Glance repPublic sector chief executive payort, shows the average chief executive in a New Zealand government department earned US$400,000 in 2011. Only in Italy, where average pay was a stratospheric US$650,000, did public sector chief executives do better. What’s more, if you compare the pay of chief executives with those of other people with university qualifications, as in the chart below, New Zealand’s government CEOs are the highest-paid in the world.

    You might ask how on earth Italian public sector bosses can be paid so well, given the country’s apparently deserved reputation for inefficient and corrupt bureaucracy. (Actually, that might be the answer right here.) But for New Zealand,

    Public sector chief executive pay 2the question is how can we have such high pay rates, in a country that is small by international standards?

    The answers will be complex, but it would be no surprise if a large part of the reason is our enthusiastic embrace of corporatisation in the 1980s and 1990s. More than any other public sector, I think, New Zealand’s government departments were restructured to be more like big companies.

    With big companies, typically, come big salaries, and all the related justifications (albeit with little evidence to back them up) about the need to pay ‘what the market determines’, get the ‘best’ talent, and so on. (It’s interesting, of course, that this rationale tends not to apply to people further down the tree. Pay rates for ordinary public sector workers haven’t risen out of line with what their private sector counterparts get.)”

    Who cares, I so luff my Buzzy Bees and Alll Blucks, theyre just wuffing awsum… nothing else matters…

    • Murray Rawshark 8.1

      “You wonder, if sometimes if the surveillance state is strengthened in order to keep the prols (not ISIS) under control.”

      Nope. I’m sure of it. Any risk of ISIL attacks or events in Aotearoa is almost totally fabricated. The only political violence I’ve been aware of has come from the right or France.

      • cogito 8.1.1


        I know what you’re referring to, but if Kiwis were a bit more like the French, there might be a bit more “égalité” in NZ.

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