Shocking truth about CEO pay in NZ

Shocking truth about CEO pay in NZ

Recently the Herald Business desk put together a list of the top 10 salaries of CEO’s in NZ.

The top 10 salaries were:

  1. $3million
  2. $3.1million
  3. $3.3million
  4. $3.37million
  5. $3.5million
  6. $3.9million
  7. $4million
  8. $4.38million
  9. $6.58million
  10. $6.64million

I have left out who they were so that you don’t get triggered by the business and stop reading ;).

I hear and read things like:

  • ‘No job is worth more than $100,000’
  • ‘Tax the rich’
  • ‘Why don’t they sacrifice their salary and pay others more’
  • ‘No one deserves that amount of money’
  • ‘Greed’

There are plenty of positive comments too, which is great to see.

Before we carry on, remember that for every dollar earned above $180,000 they are now paying 39% in tax. (This was 33% until 31 March 2021). That 6% increase in tax rate was costly for a lot of these people.

I.e. A $3.5million salary in the 2021 financial year = $2.35mil after tax and ACC

Now, a $3.5million salary in the 2022 financial year = $2.15mil after tax and ACC.

I.e. A $6.5million salary in the 2021 financial year = $4.36mil after tax and ACC

Now, a $6.5million salary in the 2022 financial year = $3.98mil after tax and ACC.

This is where people message me and say,? ‘no they have trusts and tax loopholes’.

OK sorry I wasn’t aware you knew about their structuring agreements. It’s funny when ever I ask these types of commenters for a specific example of someone in one of these roles doing this, they can’t give me details.

Anyway, a lot of these salaries are packages so they include things like share rights after ‘x’ number of years based on what targets they are or are not hitting. Often, they have to sell the shares to access the cash.

Remember, these people can easily lose their jobs, reputations and income-earning abilities. OR they can simply look overseas for more competitive salaries and taxes.

At this point you are thinking I am here to defend these CEO’s and what they earn. As always, this email isn’t even about that.

Let’s take a twist…

So you thought those salaries were huge?

You let them get you all wound up. How dear they earn way more than you and I.

Well, check out these incomes:

  1. $16million
  2. $18million
  3. $20million
  4. $27million
  5. $28million
  6. $28.5million
  7. $30million
  8. $38million
  9. $45million
  10. $54million

Guess what these earners do for a living?

That’s the incomes of the top 10 YouTubers in the world. Oh, by the way, that’s US$, so you will need to multiply by 1.6.

Most of these people are a lot younger than our top NZ CEO’s too.

What do you think this lot think about our top 10 CEO salaries to run NZ companies?

They’d laugh. ‘Is that all’…

We are all limited by the thoughts we have. We live in a small country, so we think small. We almost attack big.

We forget the world is a huge, abundant place with massive opportunity.

Big salary? Oh, you must not deserve it, you can’t earn it and you sure as hell don’t need it, so you had better pay more tax!

Says who? You and I! Where did we learn this?

Desire will take you further than envy.

What the hell does a top NZ CEO salary have to do with you and I anyway? How is your mental rent spent on this a good use of your thinking? Will it clear your mortgage faster? Will it get you closer to an amazing retirement?

Also, have any of us ever asked a NZ CEO what their life is like? Of course not.

Instead of whining about how they are over paid because we don’t understand what they actually do and the responsibility they have, why don't we try to learn about what they do and become a CEO ourselves?

Step 1, step up and become the CEO of your life and household:

  • Where is your strategy and vision?
  • Are you communicating it clearly?
  • Is it available in the public for everyone involved in your life to critique?
  • Are you leading your family?
  • Got the financial management down pat?
  • How is your household innovation and adaptability to changes in the market?
  • What is your decision-making framework?
  • Are you balancing short-term decisions with long-term goals and values?
  • Shesh, you better have an inclusivity and environmental policy? When can we all review that?

Oh baby, it doesn't sound so simple all of a sudden now, does it?

Most of us struggle to maximise our own lives, let alone one of NZ's largest companies.

Who cares what they get paid, they do so because they are good at what they do, otherwise you and I would have their jobs.

Focus on what they do and implement some of those things into your own life and household.

Study CEO’s, don’t envy them. After all, they earn chicken sh!t compared to the world's most popular YouTubers. Gee, imagine what you think about them!

Once again, and like recent weeks: focus on what you can control. You are way more likely to control your own income and life than the highest paid CEO's in New Zealand.

Have an amazing weekend,

Luke

Jessica Cree - Senior Recruitment Consultant

Partnering with businesses to understand their future growth, values, team culture and plans. Providing a tailored recruitment plan to attract key talent to their business.

1 年

Interesting perspective on this Luke Kemeys (CA) - Tall Poppy Syndrome? I would say the majority of people wouldn't want the level of responsibility and stress involved to contemplate a senior position. Let's give them credit (not financial) - haha. These CEO's are creating jobs and opportunity for all of us. Thanks for sharing your insights, always a great read

Rod Snodgrass

Co-Founder and Managing Partner at Maker Partners

1 年

Good common sense Luke Kemeys (CA) ....

Andy Kinghorn

That guy who knows someone who knows someone who's worth knowing

1 年

It feels like there are a huge number of assumptions on both sides here. I agree that people should focus on their own situation rather than worrying about other people's, but some of the points in defense of CEO salaries are a little ridiculous. There have been dozens of reports globally over the past decade all pointing towards the fact that Exec remuneration is out of control. Many CEOs even have contracts that guarantee a big payout regardless of performance. Who else gets a guaranteed huge bonus if they're crap at their job? I think some of the issue stems from people seeing these same CEOs get rehired somewhere else even if they've made a dog's breakfast of their last gig. There is a history of nepotism and "boys club" style hiring at the CEO level which we certainly aren't free of yet, but hopefully we're moving in the right direction. Yes, CEO roles are difficult and stressful, but a lot of jobs are. I have no problem with high remuneration packages for CEOs, but they should be tied to equally severe outcomes if things go belly up on their watch. If anyone out there is an investor in one of these companies, then they are certainly well within their rights to bring the Executive remuneration under closer scrutiny.

Murray Alcock

Director at PIVOT | Making property development simple and accessible. Driving 15%-20% annualised returns on equity for our clients.

1 年

Great perspective. The Cullen tax report pointed out that the net effect of tax and benefits is that the top 50% of earners in NZ pay all the tax. The top 25% the bulk of that. We have a pretty broad and fair system for taxing income. We could def raise the level of no tax threshold like Australia. It always raises the issue of taxing wealth somehow however this is fraught with major complications once you start trying to do so. I'm up for a capital gains tax but being able to define how that would work sensibly and practically is a pandoras box of issues. Great post Luke.

Liz Sloan

Senior Consultant (Legal) at Robert Walters Christchurch

1 年

Love this perspective ?? We have a massive issue with tall poppy syndrome here and rather than celebrating people's success and asking how they did it, it's more likely that people will tear them down because they get triggered. Hopefully this will start to change in NZ!

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