Exodus raises questions about pay deals

• Published date: 19 December 2020
• Date: 19 December 2020
• Publication title: Northern Advocate, The (Whangarei, New Zealand)

SkyCity chief executive Graeme Stephens left on November 30 with only a few days’ notice and no word on where he was going.

The previous day, Kathmandu said group chief executive Xavier Simonet would leave in six months to work for the Australian public service.

And again on November 30, Sky Network Television said its chief executive, Martin Stewart, was leaving the company to return home to Europe after just 21 months in charge.

Earlier in November, Summerset Group chief executive Julian Cook said he would step down after more than 10 years with the company, seven as CEO. And Summerset chairman Rob Campbell this week announced that he was retiring from that role, leaving early next year.

The exodus has again brought into question the issue of what CEOs are paid, although not necessarily suggesting they should get more.

Campbell, a former trade unionist, has been vocal on that issue.

He says CEO salaries are often out of whack with peers and colleagues and short- and long-term pay incentives should instead be built into base salaries.

“The problems I think are two-fold,” said Campbell, who chairs SkyCity Entertainment Group and Tourism Holdings as well as Summerset Group.

Campbell stressed this was his personal view and he was not speaking about any particular company or in his role as chairman of the businesses.

Many senior executives were paid salaries which did not reflect the complexity or skill of their role compared with that of their peers or other people working in their business, he said. “I think this is as a result of many years of salary reviews which are what I refer to as ‘executive escalators’ — each company and its senior executives think they deserve pay in the top half,” Campbell said.

And he suggested it is a vicious circle.

“They review the market which comprises companies and their senior executives who all think the same thing. The result has been inevitable escalation. The executive pay advisers are the complicit enablers in this addictive process,” Campbell said.

“Second, a practice has developed of complicated long- and short-term incentive payments rewarding activity which in fact should be a core component of the base salary or, worse, which reward a series of narrow outcomes. These incentive structures are supposed to align interests but in practice have lined pockets.”

He wants to see senior executives well-rewarded for fulfilling their roles within a broad view of stakeholder interests “and not as the outcome of a lolly...