Chief executives at New Zealand's biggest companies got a 2.2 per cent pay rise last year, taking their average earnings to $1,755,352 in the 2017 financial year.
It was the second-smallest increase in the 13-year history of the Business Herald's CEO pay survey.
The survey covers the top 50 companies listed on the sharemarket, with the exception of some property firms whose management structure makes it difficult to calculate CEO pay, and the addition of Fonterra because of its size, and Herald publisher NZME, included in the interests of transparency.
Fifteen executives experienced earnings declines last year, compared with nine recorded in the previous year's survey. The 2.2 per cent average increase was the lowest on record, apart from 2011, when average CEO pay fell by 0.4 per cent.
While CEO earnings increases were modest compared to some previous years, 38 of the 50 chief executives in the survey still received more than $1 million in remuneration, and their average was 55 times the median annual income Kiwis received in that year, recorded at $31,928, according to Statistics NZ.
The average CEO increase was in line with the 2.3 per cent rise Kiwis received last year.
Former Fonterra boss Theo Spierings was the highest-paid executive last year. Spierings, who stepped down last month, received $8.3m for the 2017 financial year, up from $4.66m he received a year earlier.
A significant portion of Spierings' pay package for Fonterra's 2017 financial year - $3.1m - came from the company's Velocity incentive programme, which has now been canned.
A Fonterra spokeswoman told the Business Herald the company had since moved to commonly-used short- and long-term incentive plans which reward executives based on the return on capital and earnings per share.
Fonterra will report Spierings' golden handshake payout next year.
In the latest survey, Air New Zealand boss Christopher Luxon came second to Spierings, receiving $4.66m last year, about $650,000 more than a year earlier.
ANZ Banking Group chief executive David Hisco came in at third place on $3.7m in the 2017 financial year, a decrease of more than $618,000 compared to a year earlier.
Other top earners were: Adrian Littlewood of Auckland International Airport ($3.3m for the 2017 year); Heartland Bank boss Jeffrey Greenslade ($2.7m); Spark managing director Simon Moutter ($2.69m); Restaurant Brands' Russel Creedy ($2.45m); Meridian Energy's Mark Binns ($2.37m); Ebos boss Patrick Davies ($2.34m); and Westpac's David Mclean ($2.3m).
Pay packages fall for some executives
CEOs who experienced pay decreases last year include two of the top earners - Hisco and Littlewood. Hisco's pay declined 14.3 per cent and Littlewood's 2.9 per cent on the year earlier.
Metlifecare boss Glen Sowry's pay declined the most of all CEOs in the 2017 financial year, down 73 per cent, followed by then-Fletcher Building chief Mark Adamson, who forfeited his long-term incentive of $2m when he left the company in July 2017. His pay declined by 55.6 per cent.
Vector chief executive Simon Mackenzie experienced a 25 per cent decrease in his annual earnings, to $1.17m.
New Zealand Shareholders' Association chairman John Hawkins says the relatively modest increases to CEO earnings in the 2017 financial year could be attributed to flat company earnings posted a few years earlier.
"About three years ago, a number of larger companies where the CEOs are perhaps higher-paid did have a flat period and I think that's now flowing through with some of their at-risk pay," Hawkins says.
"What it is showing is the slightly flatter results earlier on are now flowing through. By and large, it would appear New Zealand CEOs' multiple of pay relative to ordinary wages has not increased, in fact it has probably decreased a little bit."
While Spierings has departed, the chief executive of another dairy company - a2 Milk's Jayne Hrdlicka - is on track to become the country's highest-paid CEO in her first year in the job.
Hrdlicka - whose 2017-18 pay will be included in next year's survey - is set to earn almost $8m in her first year in the role, if certain targets are met.
Hawkins says the Shareholders' Association believes her remuneration structure is shocking: "We'd like to see some performance before we see fancy pay.
"We want to see some absolutely stunning performance from someone getting that sort of money. The person who has guided this company to the position it is, is the previous CEO Geoffrey Babidge, but the new CEO seems to be the one getting the benefit.
We'd like to see some performance before we see fancy pay.
"If a company is doing super well, shareholders are not generally going to be concerned about what the CEO and other executives get paid because everyone does well. It's where the balance goes wrong that people get upset."
Hawkins says many New Zealand CEOs have the ability to work for multinational companies and often take substantial pay cuts to work in this part of the world.
"This year the pay rate [increase] on average is down somewhat, which indicates, to a degree at least, that the system can work, and I think is working, and we're not seeing the explosion in CEO pay relative to ordinary people that we've seen overseas in recent times."
In the US, CEO pay at larger companies is about 300 times that of the average employee - which makes the local 55 times average in New Zealand seem modest.
Hawkins says it is a concern CEOs' short-term incentives are fast becoming large sums of money. "We think that is seriously wrong as it leads to short term-ism ... and CEOs do have quite a lot of power to juggle things so that numbers can look better in the short term.
"Investors, generally, take a longer term view of their companies. Running a company should be about the long-term health of the company."
At some companies, the CEO isn't the top earner. Strategic Pay chief executive John McGill says it is unusual, but not unknown, for an employee of a listed company to earn more than the CEO.
"It could be employment of very specialised individuals, it could be those individuals are from a different job market [such as the US]," McGill says.
He cites examples such as doctors earning more than District Health Board chief executives and TV personalities more than their bosses.
Opting for larger shareholdings as opposed to cash payouts, or allocated shares as incentives or bonuses, offered more earnings potential, McGill says.
"When CEOs get their money, they can take it in two options: in salary or based on the performance of the company with shareholding."
With the latter, for some CEOs, "success or financial reward becomes very dependent on the success of the organisation, and that's what they have basically been employed to do."
Dr Bill Kirkley, senior lecturer at Massey University School of Management, says share-based incentives work to retain the individual.
"What you're doing by doing that is giving the employee or CEO an equity stake in the company, making them a part owner of it, so their performance is linked directly to that share price," Kirkley says.
"Once you become a shareholder of an organisation it is rare that you are going to let your performance drop, or anybody else's."
Kirkley says the boards which set CEO remuneration are beginning to put more emphasis on paying CEOs in shares. "[Such schemes] are widespread, but they're not quite the beast you get at American companies in terms of the amount of people's pay that they constitute."
'Shareholders need to get behind female CEOs'
Just one woman - Kate McKenzie of Chorus - was recorded in the survey, up from none at all in last year's survey. Since the end of the survey period, she has been joined by a2 Milk's Hrdlicka, who took the reins in July. She will feature in next year's CEO pay survey.
AUT University professor of human resource management Jarrod Haar says there is no good reason why there is not an equal - or nearly equal - proportion of women leading the country's largest firms.
"The biggest problem is inherent bias in the workplace against women," Haar says.
Women make up 50 per cent of the workforce, he says, but as you go up the organisational chart, that proportion falls, with a relatively small number of women in executive management. "And so therefore the amount of women to go for CEO roles is so small that they get disadvantaged."
Shareholders, as a matter of profitability and as a matter of natural justice, should always ask the question: 'do you have diversity?'
Haar says this could be fixed by ensuring that women have equal training and promotion opportunities, and curbing behaviour that results from inherent bias.
"We've had so much time now around this. Organisations need to do a heck of a better job selecting, training and giving women the same opportunities," says Haar.
"Shareholders need to remind these publicly-traded companies, 'as your shareholder I want to see more women, and not just the CEO'."
Of the companies featured in the survey, just six have had a female chief executive either now or in the past. They are: Chorus, Westpac, Summerset Group, Spark (formerly Telecom) a2 Milk and NZME, where Jane Hastings was chief executive, but left the company before it listed on the NZX in June 2016.
There are also two women running banks in New Zealand - Vittoria Shortt at ASB and Angela Mentis at BNZ.
Theresa Gattung, the first woman to lead a publicly-listed New Zealand company - Telecom, now known as Spark - says she is still stunned at the lack of women leading public companies.
"I did a business degree in the 80s and at that time decided I wanted to be a CEO of a public company. If you told me then, that by 2018, in my mid-50s - 35 years later - that those stats would be like that I would have been horrified," she says.
"The way to get more CEOs is to make sure executive teams are 30, 40 and 50 per cent female, and in particular, that women in those teams are not just in HR and marketing, but are actually running divisions. If you commit to that over an enough period of time then there will be more women CEOs."
Gattung says shareholders need to speak up to companies they invest in, to ensure more women are taking the reins - or are able to. "Shareholders, as a matter of profitability and as a matter of natural justice, should always ask the question: 'do you have diversity?'.
"We're fine about women leading the country, yet we seem to have this huge blind spot about women leading large companies because not enough of us care enough to do something about it."