Banker's $5.5m package 'unethical'

George Frazis, Westpac New Zealand chief executive, Photo / Steven McNicholl

Westpac boss George Frazis is New Zealand's highest ever paid executive with a yearly package worth $5.59 million - a figure a bank workers' union have branded unethical.

Mr Frazis' total remuneration was revealed in the bank's annual report as A$4,386,308 for the year to September 30.

Converted to New Zealand dollars it puts Mr Frazis ahead of both Telecom chief executive Paul Reynolds and Fonterra boss Andrew Ferrier.

The bank workers' union, Finsec, criticised the package, coming during economic troubles and because of Westpac being covered by the Government's deposit guarantee scheme.

Mr Frazis' package included fixed remuneration of A$967,330, short-term benefits of A$1,586,363 and a superannuation payment of A$14,586. He also received options worth A$399,634 and share rights valued at A$1,418,395.

But a spokesman for Westpac said Frazis was not the highest paid because the package was not all from Westpac.

"The A$1,418,395 in share rights relates to a previous employment and is not part of his permanent salary package," he said.

Mr Frazis joined Westpac in March 2009 and was previously employed by National Australia Bank - the parent company of BNZ.

Mr Reynolds was New Zealand's highest paid chief executive in the year to June 30 2009 on a pay package worth $5.41 million but dropped down to $5.15 million this financial year.

Mr Ferrier was paid $5.11 million in the year to July 31.

Andrew Campbell, spokesman for Finsec, the finance industry's union, said it was galling to see the bank give such an extravagant package to its boss while being underwritten by the taxpayer.

"There is no public accountability in relation to this salary package despite it being in place while the bank was underwritten by the government guarantee scheme."

Mr Campbell said it was also poor timing given the general state of the economy and the high numbers of unemployed. "We think it is unethical to pay such a large salary to one person while the economy falters and the average worker has seen no or limited wage growth."

Mr Campbell said it was worrying to see a high proportion of the package relating to short-term benefits.

"An excessive focus on short-term gains for senior bankers was a key driver of the global financial crisis and economic collapse," he said.

The package also raised questions about the need for executive salary controls in New Zealand as were being talked about in Australia, he said.

Massey University banking expert David Tripe said the package looked high for New Zealand.

He said Mr Frazis's salary package appeared to be set from an Australian perspective where executives were less sensitive to the local economic environment.

"Generally management in New Zealand are more sensitive to the local environment. In Australia it's a badge of honour."

This month Westpac New Zealand reported a net profit after tax up 36 per cent to $322 million after the bank slashed its impairment charges by 39 per cent to $347 million.

NZ BANK BOSSES' PAY

* Westpac Bank, George Frazis... $5.59 million

* Bank of New Zealand, Andrew Thorburn... $3.76 million

* ANZ, Jenny Fagg... $2.72 million

(left one month short of a full year)

* ASB, Charles Pink... not recorded in annual report

(has since left the company)