Big pay rises for bosses

Almost half New Zealand's chief executives received pay rises last year - with a median increase of 5 per cent - despite the worldwide recession and many workers enduring salary freezes.

A survey, released today, of 455 chief executives, general managers and managing directors found 48 per cent received a salary increase last year.

The percentage of bosses receiving pay rises was a big drop on previous years, but commentators are surprised the number was so high.

Less than 1 per cent of those surveyed had their pay cut, and the median increase for those who did get a raise was 5 per cent, down from 6.1 per cent in last year's survey.

The Moyle Consulting survey says the average chief executive is male, aged between 47 and 59, and has a median base salary of $200,000 and a $300,000 overall package.

Employers and Manufacturers Association chief executive Alasdair Thompson was surprised by the results of the survey.

"I would say those 48 per cent that got a pay rise were pretty lucky," he said.

"I would have thought it would have been more like 25 per cent."

Shareholders Association chairman Bruce Sheppard said he was also surprised.

"I have no problem with CEO pay going up if they deliver on the performance criteria the board set for them, but I can't see too much rationale to increase base pay," he said.

Mr Sheppard said he could understand a board lifting a chief executive's base pay if other employees in the organisation were receiving salary levels that were creeping towards the CEO's rate.

"There are adjustments that are made, but 48 per cent in an economy that's flat - that surprises me. But I would have been equally surprised if it was zero."

The Moyle survey follows the labour cost index released this week, which showed 43 per cent of general workers received a pay rise in the year to March.

The median increase was 3.3 per cent - 1.7 percentage points below the chief executives in the Moyle survey.

Council of Trade Unions economist Bill Rosenberg said the surveys showed companies should be able to give pay rises to their workers.

"A lot have been saying 'we can't afford to' in these recessionary times ... . we would hope that they are treating their workers at least as well as they are treating the CEOs."

Moyle Consulting director Jarrod Moyle said the 48 per cent figure was down from an average of 80 per cent in previous surveys.

The world financial crisis was the main reason for the reduction experienced by many top executives last year, he said.

"The worst economic crisis in decades unsurprisingly had a dramatic impact on remuneration."

Mr Moyle said feedback from chief executives suggested a sense of unease over their salary reviews this year.

Those who did not receive a raise last year feared they would miss out again this year.

The survey also indicated that many chief executives missed out on bonuses last year. The incidence of performance pay dropped from 53 per cent in 2008 to 43 per cent last year, and Mr Moyle said it was "concerning" that many organisations had put incentive schemes on hold.

"Now would be the ideal time to introduce or increase incentive schemes to ensure the executive is focused strongly on results and rebuilding the company."

He said the overall slowdown in pay growth "may be regarded as positive" by people who thought CEOs were overpaid.

But it increased the risk of top talent being "cherrypicked" by Australia.

"Australia sailed through the recession and I think New Zealand is at risk of an exodus of skilled people ... as the pay gap widens."

Many of the executives surveyed indicated that their outlook on future business conditions had improved, he said.

"I think many people are not expecting 2010 to be a booming year, but certainly to be better than 2009."