'Meagre' raises for executives put NZ's talent pool at risk

By DITA DE BONI

Whether it's the infamous tall poppy syndrome or a genuinely cash-starved business environment, research has found Kiwi senior executives are suffering from the lowest pay increases in five years.

Two surveys hot off the press from Sheffield Consulting Group show the median pay increases for chief executives at 3.8 per cent and senior executives 4 per cent last year - the lowest since 1994.

Five hundred managing directors, chief executives and general managers made average pay packets of between $140,000 and $250,000, with 5 per cent tipping the $500,000 mark, making New Zealand a definite lagger in the international "war for talent" stakes says Sheffield managing principal Ian Taylor.

While average Jo-shmoe wage rates gained just 2.8 per cent and the average gross wage $35,475 by comparison, Mr Taylor says the central issue is one of being able to attract the best talent from the global talent pool - something he thinks New Zealand is becoming less and less capable of doing.

"Some say we can't afford to pay people the same rate here [as in the U.S.] but you could equally ask, can we afford not to?"

New Zealand business needs to take a more long term approach to renumerating top brass, he says, including more stock options and shares in the total package and rewarding principals for long term growth productivity.

"In the U.S., for example, only 35 per cent of an executive's package is base salary, with the rest comprising share options and the like. For New Zealand-based executives, 65 per cent is base salary."

"And only 64 per cent [of CEOs] had any increase in base pay - down from 70 per cent in 1998."

Mr Taylor warned that the new Government's top bracket income tax rate would slash take-home pay even further and make the country still less appealing to high-flyers.

While he agreed lifestyle was often an incentive that executives had for choosing to live in New Zealand, they were most likely to return to this country "at the end of their career, having accumulated wealth, rather than being in the height of their earning and working potential."