Chief executive salaries merely keeping pace with buoyant market

SkyCity Entertainment Group chief executive Nigel Morrison earned $3.24 million in 2014. Photo / Chris Loufte

The double digit rise in the average pay packets for New Zealand's top chief executives is likely to stir some controversy.

Even with the economy performing well, workers only averaged about 3 per cent.

But when you look at the strong performance of the sharemarket over the past couple of years it should come as no surprise that we are starting to see some big numbers in our annual survey of the largest publicly listed companies.

See our interactive here.

The NZX 50 index rose 18 per cent last year generating considerable wealth for shareholders including good returns for millions of KiwiSaver investors.

Chief executives typically have a large part of what they earn tied to performance targets. Last year most of those targets will have been met.

There will always be outrage from some quarters about the seemingly exponential scale of executive salaries. But we live in a free and global market where supply and demand set the pricing for talent.

Public concerns about unfairness of salaries seldom carry over to those of the top paid sports and entertainment stars with the same degree of passion.

The point of the Herald CEO Pay Survey has never been to target individuals - though there is no doubt plenty of interest in the big names.

More relevant are the concerns of shareholders when the pay increases of chief executives aren't backed by performance. That is the reason that the disclosure requirements that come with a public listing are so important.

Looking back over the years of this survey we can see that it does act as a barometer for the rises and falls in fortune of the business world.

In the wake of the global financial crisis New Zealand companies took a while to feel the heat. The high tide mark was our 2010 survey in which four chief executives earned more than $5 million.

Four years later and no individual is yet back at those levels.

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