Last year’s recession has cut into the pay packets of New Zealand’s top chief executives, with an overall decline in average remuneration. However, the country’s highest-paid female CEO joined the $5 million club for the first time, a Herald survey reveals.
Average pay for the country’s top chief executives has taken a hit, as performance incentives were stunted by negative share price returns during the economic recession.
But there were some individual standouts, including a big jump in pay for the head of the country’s largest business, Fonterra, while for the first time, a female CEO has passed the $5m mark.
Chief executive remuneration packages declined by an average of 2.41% for the 2024 financial year, according to the latest Business Herald Executive Pay Survey, which covers 51 companies listed on the stock exchange and two Australian-owned banks not listed here.
After a significant post-Covid increase in 2021 and 2022, average remuneration has increased just 1.27% since then, according to the survey, which analyses data from company annual reports.
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The survey reflects a difficult economic environment for companies and their shareholders in the 2024 financial year.
New Zealand entered a deep recession (defined by two quarters of negative GDP growth) in June 2024, following a prolonged period of subdued growth in 2023.
The S&P/NZX50 Gross Index, which counts dividend payments and share price appreciation, declined 1.67% in the 12 months to June 30 – the balance date of the majority of companies in the index and when most CEO’s remuneration is recorded.
CEO pay can be heavily influenced by incentive schemes, including performance bonuses that are tied to a company’s share price over a defined period.
In 2024, the average chief executive pay for the top-listed companies fell to $2.23 million, down from $2.28m in 2023. Twenty CEOs received at least $2m, down from 25 in 2023.
“The New Zealand economy has been in a sort of deep funk for quite some time, and that is reflected ultimately in the incentive packages that the CEOs are receiving,” said Oliver Mander, chief executive of the New Zealand Shareholders’ Association.
Mander said it often depended on what was awarded to the CEO as part of their package and the timeframe over which that was assessed in terms of meeting targets.
“What they actually earn … may not necessarily come in cash in the year it’s awarded.
“The reason things have gone down in 2024 as compared to the previous year simply reflects that the share price performances in New Zealand for the last three years, which drive a lot of the outcomes for those incentives.”
Neil Munro, a business director at Robert Walters New Zealand, noted there had been very little shift in CEO base salaries.
“It’s the performance-based portion of their compensation that has taken a hit, and I think that’s what shareholders expect.”
For the third year running, Ebos CEO John Cullity was the highest paid CEO, although his total remuneration did fall by 14% from the previous year, which had been boosted by a special acquisition-related short-term incentive (STI).
He received total remuneration of A$6.65m in the year to June 30, 2024 ($7.27m based on the exchange rate at the time). That was made up of a base salary of A$1.57m, STI of A$2.55m and a long-term incentive (LTI) of A$2.50m.
Ebos reports in Australian dollars, given that the group generates about 80% of its earnings in Australia. The company, which focuses on marketing and distributing medical consumable products, has delivered an 89% shareholder return over five years.
David Bortolussi, who heads the a2 Milk Company, was second on the list - taking home $6.59m, a 13% increase on the previous year. Bortolussi’s remuneration, which includes a base salary of $1.93m and performance pay of $4.1m, has climbed 70% since 2022, reflecting the company’s turnaround in performance. Shareholders have enjoyed a 5-year return of 54.8%.
Fonterra CEO Miles Hurrell received a 29% increase in his remuneration, with a total payment of $5.92m for the year to July 31. Hurrell is starting to reap the benefits of the co-operative’s much-improved financial performance, as well as a favourable milk price.
His incentives, which make up the bulk of his remuneration, include return on milk, sustainability, innovation and people. Fonterra has achieved an impressive 193% shareholder return over five years.
Hurrell was appointed CEO in 2018 and has overseen a significant change and strategy reset, including the current plan to divest its global consumer business and focus on ingredients and foodservice. His predecessor, Theo Spierings, was paid more than $8m in his final year at Fonterra and collected $43m over seven years.
ASB New Zealand chief executive Vittoria Shortt also retained her spot as the highest-paid female CEO and last year reached a significant milestone as the first woman to join the $5m club.
Shortt, CEO of ASB since February 2018, earned $5.15m (converted from AUD) in 2024, a 45% increase on the previous year.
She received a base salary of A$1.07m in 2024 and deferred awards of A$3.23m. Her take-home remuneration has doubled since 2020.
As with previous surveys, there is a paucity of female CEOs in the top list, just six this year. ANZ’s Antonia Watson was the second highest earning female at $2.79m, followed by Westpac’s Catherine McGrath ($2.4m), Auckland Airport’s Carrie Hurihanganui ($1.94m), Spark’s Jolie Hodson ($1.77m) and Sky Television’s Sophie Moloney ($1.15m).
Cathy Hendry, managing director of remuneration consulting firm Strategic Pay, said while there had been an increase in female representation at senior levels, that hadn’t flowed through to the CEO level yet.
“When we look at the private sector cut, females only make up 10% of the sample. And that does contribute to the [gender] gap, where we are seeing pay gaps of 21.9% in the private sector.
“It’s a real long game, but it’s a good thing that Vittoria’s there, and hopefully we’ll start seeing a few more over time.”
While average remuneration fell last year, there were several sizeable increases, driven by a variety of factors.
Meridian CEO Neal Barclay had a big jump, his total pay climbing 73% to $3.25m because of some long-term awards vesting in 2024, whereas he had no LTI payment in 2023.
Nick Grayston, former CEO of The Warehouse, received $4.2m, a 51% increase because of a termination payment of $2.18m. Grayston left the company in May 2024. The Warehouse said the additional payment was his contractual entitlement on termination of his employment, plus a discretionary payment of three months’ notice paid in lieu.
Outgoing Air New Zealand boss Greg Foran’s total 2024 pay climbed 34% to $4.19m, including incentives and benefits and a $900,000 retention payment. Foran has since resigned and will forfeit that retention incentive this financial year.
A striking feature of this survey is that the three biggest decreases were lodged by the CEOs of poorly performing companies, two of whom have departed.
SkyCity Entertainment‘s former CEO Michael Ahearne experienced the biggest decrease in pay, his remuneration falling by 55% to $1.35m. SkyCity’s shareholder return has been negative 57% over three years and negative 53% over five years. Recently the company has been dealing with multiple regulatory failures and it produced a net loss of $143.3m last year.
Likewise, Fletcher Building‘s former CEO Ross Taylor had a 37% decrease to $2.3m following another round of asset writedowns and a near $230m net loss in 2024.
Spark CEO Jolie Hodson had the third biggest decrease in the survey, her remuneration falling by 35% to $1.77m amid the telco’s weak financial results, dividend cut and share price slump.
Strategic Pay’s Hendry said this indicated remuneration structures were working as intended.
“You’d be worried, and you do see that overseas sometimes people get these big packages, and the company hasn’t performed and you’re like, what’s going on here.
“So yeah, at least in this instance, the company’s not doing well, pay packages have adjusted accordingly.”
Munro agreed, although he said there are always exceptions.
“I think most shareholders, and there’ll be exceptions out there, feel that is working for them in these cases.”
Mander said remuneration structures were a key area of focus for the Shareholders’ Association, especially around alignment with company performance.
“What we are finding, and it’s very similar to what we see overseas, is that there is very little correlation between the operating performance of a company as defined by long-term cash flow or net profit measures and how that relates to the pay packages CEOs receive.
“So what that points to is that more work needs to be done on both incentive structure design and possibly also the time frames over which they’re assessed right now.
“They’re currently assessed as a long-term incentive over three years. There’s a real question about whether three years is defined as long term.”
Mander said the Shareholders’ Association always encouraged long-term investment and believed incentive pay packages should genuinely reflect that longer timeframe that most individual shareholders are invested in the markets for.
Are New Zealand CEOs potentially overpaid then?
“If we think about pay packages for CEOs in relation to what their counterparts in Australia may receive, you can say, ‘no, they’re not overpaid’.”
“On the other hand, our companies are smaller, and some of them are less complex. Some are highly complex, and some of them have very internationally focused businesses that need special care and attention.
“So I don’t necessarily think it points to executors being overpaid. What it does show is that investors need to look at each company on its merits in terms of how they’re assessing what’s appropriate CEO remuneration, and those that can be really hard to unpick.”
Duncan Bridgeman is managing editor of NZME Business, including the Business Herald and BusinessDesk.
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