Rise of the $1m salaries: top boss says enough

Ian Taylor's last rise was 10 years ago. Photo / Dean Purcell

Pay deals 'should reflect how well CEOs protect jobs and be aligned with workers' income.'

More than 40 executives at three of New Zealand's top companies now earn more than $1 million a year, and one of our top bosses has taken a swipe at CEOs' salaries.

Former New Zealander of the Year and television host Ian Taylor - now considered one of the country's most astute business people - says he can no longer remain silent on the debate around executives' salaries.

"As a CEO of a privately owned company, I have not taken a pay rise for 10 years and I currently share my salary with my wife, who works fulltime in the company without pay," said Mr Taylor, founder and CEO of Animation Research in Dunedin.

"I have made a personal commitment to remain on that salary until I am satisfied every person working with me is paid what they are worth."

Mr Taylor's comments come as the Business Herald today reveals that 41 executives at Fonterra, Telecom and Fletcher Building earn more than $1 million a year. The number has more than tripled in a decade, and sparked debate over their level of pay.

Former Telecom chief Paul Reynolds was paid $12.7 million in the last financial year. Fonterra's Andrew Ferrier received $8.2 million and Fletcher's Jonathan Ling $2.4 million.

Pay surveys released mid-year showed the median annual base salary for CEOs and managing directors rose by $28,311 to $315,000 this year - a jump of nearly 10 per cent.

Mr Taylor said a CEO's remuneration "should be measured by how well he or she protects jobs and should bear a direct relationship to how well the employees ... are paid".

In a letter to the Herald, he referred to a comment last week by former Nuplex chairman Fred Holland, who, when referring to a 26 per cent rise for non-executive directors, said: "You won't get anything but monkeys if you pay peanuts."

Mr Taylor said: "If that means I have joined our fellow primates in his eyes then I know who I would rather spend my time with: Them and the countless other CEOs and management of small New Zealand companies who still live in the real world."

Mr Taylor's business, established in 1990, is considered to be one of the top computer animation companies in the country. In 2010, he was made an honorary fellow of the New Zealand Computer Society. The year before that he was inducted into the Technology Hall of Fame.

Mr Taylor is a former presenter of children's programme Spot On and New Zealand's Funniest Home Videos.

Shareholders Association chairman John Hawkins said Mr Taylor's comments were admirable.

"We don't disagree with some aspects of that. We have suggested to CEOs a range of pay that is reasonable in our view. We also want to link it to company performance.

"What we struggle with is when CEOs' pay gets massively out of kilter with everyone else's."

Engineering, Printing and Manufacturing Union leader Bill Newson said Mr Taylor's stance was laudable.

"While we're not saying all CEOs got that [nearly 10 per cent median CEO pay increase], the evidence, based on the averages, is that CEO salaries do need to be linked closer to what their employees are getting - or the other way around. We would welcome the other way around."