The Dim-Post

October 18, 2012

Maximum pay?

Filed under: economics — danylmc @ 8:42 am

DPF critiques a Herald column advocating maximum salaries:

A maximum wage is indeed not socialist, but full out communist.

You see it has been tried. In several countries. In the USSR they had maximum salaries. They had the exact view that Ryan had. They though no one should earn over a certain amount as a salary.

It failed. It was a disaster.

This wasn’t actually how the USSR worked. If you lived in the USSR and were the equivalent of a CEO, ie you were part of the military or political elite, then you were fabulously wealthy. Apartments in Moscow and Leningrad, house in the country, dacha on the Black Sea, thousands of servants etc. When the economy liberalised in the 1990s those people became billionaires overnight. The problem with the Soviet model is that life was pretty shitty for the other 99.9% of the population.

My argument with the maximum wage idea is more basic. What problem is it trying to solve? The problem that people with valuable skills are paid well?

The CEO pay problem is a symptom of a wider failure in our political economy: in a functioning capitalist system the financial sector is supposed to allocate surplus wealth to appropriate sectors of the economy; instead the finance sector sucks money out of the productive economy. The shareholder capitalism model rewards CEOs who collaborate with this process.

I don’t know what the solution is, but arbitrary caps on salaries ain’t one of them.

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49 Comments »

  1. How about a relative earnings limit, ie. a limit on a business, to the wage an individual is allowed, as a specific multiple of a company’s lowest earner. Could be a voluntary scheme to avoid accusations of draconian law.

    Comment by Tim H — October 18, 2012 @ 8:46 am

  2. As much as the vast disparity between CEO and shop floor pay rates doesnt do much good for society, i dont think we could legislate a cap for the private sector – that would need to be more of a long, long term attitude adjustment than a govt forced initiative. Theres a role there for the Govt in the messages it send to the private sector of course

    But having said that, i do see that this idea could play a role in the public sector.

    MPs earn Y x more than the MEDIAN (not average) wage – want a pay increase? – improve the economy and implement policy settings that help improve wages for everyone else
    Public sector CEOs and executives earn Y x more than the median wage of the staff.

    In effect we as taxpayers would be exercising our “shareholder” rights to set the renumeration of those we employ

    Comment by framu — October 18, 2012 @ 9:19 am

  3. What it is trying to solve is inequality. You can have two methods to achieve equality that already exist is modern capitalist democracies; tax and re-distribute (Nordic countries) or voluntary caps on salaries (Japan). In Japan the salary ration between highest paid and lowest paid is about 7:1. Labour are obviously tacking for the Japanese model, which is fine. The method is kind of unimportant – the result (an equal society) is very important.

    Anyway the entire premise of higher pay equalling better performance actually has been proven to be false for decades now. It has simply been completely ignored by those in power, for some reason… Once you pay someone enough so that money is no longer an issue (you can pay all the bills and go on a holiday etc. without worrying) paying someone more actually degrades their ability to do their job. Now the evidence for this has been writ large over the world with the GFC and here in NZ again and again…

    What motivates people is Mastery, Autonomy and Purpose. Mastery – to become the best that you can be at something; Autonomy; that you have self-direction and Purpose; that you know what your goal is and this is generally a goal you have in common with other people.

    Comment by Shane — October 18, 2012 @ 9:25 am

  4. ‘Capping’ high incomes is one purpose of progressive income tax scales. NZ’s is effectively ‘flat’ above a very low threshold. A couple of new steps with high marginal rates would go a long way toward addressing this.

    Comment by brnun — October 18, 2012 @ 9:29 am

  5. But having said that, i do see that this idea could play a role in the public sector.

    It already happens for State CEO in France – maximum ratio 20x.
    Drucker established the ’20x’ maxim in 1976 so it’s pretty orthodox in terms of management theory.

    Comment by Gregor W — October 18, 2012 @ 9:49 am

  6. The problem that people with valuable skills are paid well?

    I think that the problem it is trying to solve is people being paid well in-excess of the value of their skills.

    Comment by RJL — October 18, 2012 @ 10:04 am

  7. Tim H wrote:
    “How about a relative earnings limit, ie. a limit on a business, to the wage an individual is allowed, as a specific multiple of a company’s lowest earner.”

    this would mean that the CEO of Geeks on Wheels would be allowed to be paid much more than the CEO of Pak n Save, because Geeks on Wheels’s lowest-paid worker is likely to be much more highly qualified than Pak n Save’s lowest-paid worker, even though Pak n Save is likely to be harder to manage, due to scale, compartmentalisation of activities and employees being less self-managing. Than again, maybe this doesn’t matter, as in practice the salary of the Geeks on Wheels CEO would continue to be set by factors other than the salary cap.

    Comment by kahikatea — October 18, 2012 @ 10:15 am

  8. I think New Zealand is a good country for a maximum wage. We have so little private companies that pay their top managers huge amounts of money, while we do have a lot of taxpayers money going to pay ridiculous salaries, such as $600,000 per annum, $2,000,000 per annum, etc.

    I don’t see any point in putting our economy in a further rut by limiting the amount private companies pay their management, but I see this as an opportunity to cut the massive salaries given to some people in the public sector.

    I think it should be capped at $500,000, though.

    Comment by Dan — October 18, 2012 @ 10:36 am

  9. “If you lived in the USSR and were the equivalent of a CEO, ie you were part of the military or political elite, then you were fabulously wealthy”

    At what stage between 1917-89? Reference? I suspect that although the politburo lived as well as they wanted to, most of the high-mid level people who were the equivalent of our CEOs (kolkhoz manager, regional party secretary) would have lived comfortable but modest lives. (And under Stalin, would have had rather worse consequences for failure than ‘gardening leave’).

    There are numerous maximum wage caps today. The US public service (including the military) has one, set at the Vice President’s salary (~200k). The huge Spanish co-operative Mondragon (twice the turnover of Fonterra) caps top salaries at between three and nine times that of the lowest-paid worker.

    The effect of these is to make management live in the same world as workers, and remove the expectation that a salaried career (especially in the public service) is a way to get rich.

    Comment by richdrich — October 18, 2012 @ 10:46 am

  10. A point to note is that whilst there is some form of capping of salaries does occur in some places, what happens is that other rewards are substituted such as titles (knighthoods being an example), company cars/planes, executive assistant staff (chauffers, people who collect your laundry, get you lunch etc) dachas by the sea. Determining the value of someone is clearly a bit hit and miss (a bit like determining the value of a possible new innovation or movie), it relies on a mix of past performance and soft information (for movies/innovation has x made stuff in the past, do we think there next idea might be a winner). In the business sector not having a cap on salaries is a “least worst” outcome because then it is at least clear to shareholders the folly of their decisions.

    For the public sector caps on salary are a bad idea because of the real risk that other rewards will be substituted that are not transparent and can generate corruption. Publishing publiuc sector salaries (which the SSC does) provides information to the public on the general acceptability of the salary, even if its not going to please everyone.
    Its worth noting that in Japan the flow of officials/high ranking politicans (who are salary capped) to high paying/rewarded private sector jobs is a well developed career path.

    My vote on a least bad outcome is for transparent uncapped salaries, at the least we know where the mistakes are being made.

    Comment by WH — October 18, 2012 @ 10:53 am

  11. @Tim H – That is exactly what I was going to say. At the moment the richest are getting out of control wealthy, and the very richest individuals have more money than they could possibly ever need. Society is becoming more and more unbalanced as a result. The solution is not an arbitrary cap, but an admission that if some are to become fabulously wealthy, then it can only be if they enrich everyone at their company too.

    Shouldn’t be voluntary though, because then no selfish wealth hoarder would do it.

    Comment by alex — October 18, 2012 @ 11:20 am

  12. Salary cap, great idea. Don’t forget to bring in exit visas at the same time, though. You wouldn’t want the country to suffer the so-completely obvious (but no doubt unintended) consequence of brain drain.

    3.”What it is trying to solve is inequality.” says Shane
    And we should break the legs of all able bodied folk, because life is hard for the disabled..?

    Comment by Clunking Fist — October 18, 2012 @ 12:55 pm

  13. Danyl, what do you mean by “in a functioning capitalist system the financial sector is supposed to allocate surplus wealth to appropriate sectors of the economy”?
    Do you mean channel the savings of savers (you call them the wealthy) to businesses that need finance, either loan/share capital? How is our financial sector not doing that?
    Or is it that your definition of “appropriate” is different from what the banks/investors definition?

    Comment by Clunking Fist — October 18, 2012 @ 1:00 pm

  14. Clunking Fist
    The disabled and their families that help them need more financial assistance. This has recently been on the news and is in the process of happening. I also think more assistance needs to be given to those on sickness benefits. Those that have been on those benefits for a long time and are genuinely ill are suffering financially because of the government’s propensity to put lazy unemployed people on that particular benefit.

    I’m sure your reference to exit visas was a bit tongue-in-cheek, however it’s not actually such a bad idea. It may not be necessary, because the downturn in Australia should see some of our natural citizens return here to live, but it’s something to look at if a phenomenon such as this happens again.

    Comment by Dan — October 18, 2012 @ 2:07 pm

  15. @14 – Exit Visas??????? are you competing with Ryan Wood

    email me I have a bridge to sell you, you look like an astute investor.

    Yours sincerly

    Prince Uhavenoidea
    Ministry of Extraction Resources
    Nigeria

    Comment by WH — October 18, 2012 @ 2:30 pm

  16. How about just capping salaries for the public sector at, say. nine times the salary of the lowest paid worker in the same department?

    This would have the added advantage of reducing taxes, council rates and so on, which would make it LOOK like the kind of neo-liberal thinking every powerful person in the country is so enamoured with at the moment,

    Comment by billbennettnz — October 18, 2012 @ 2:31 pm

  17. Salary cap, great idea. Don’t forget to bring in exit visas at the same time, though. You wouldn’t want the country to suffer the so-completely obvious (but no doubt unintended) consequence of brain drain.

    You’re right. Because the brain-drain is not happening now with free-for-all salaries at CEO level.
    Ffs – talk about a long bow to draw, CF.

    We’re talking a tiny number of people on massive salaries, figure-heading organisations that – with a few notable exceptions – would truck on regardless. The whole CEO-as-indispensable-helmsman/woman is a long running sham perpetuated by the unholy troika of Executive Appointment Agencies, CEO/Exec Board club members and Management Consultant sporting B-School psycho-babble.

    Organisations are effective as a result of their culture.The type of transformational leadership that creates culture as opposed to maintaining it is a very rare commodity. That’s what you pay the big bucks for – not the usual gold-plated seat warmers that seem prevalent in NZ.

    Comment by Gregor W — October 18, 2012 @ 2:57 pm

  18. High CEO pay is, I think, a sign of monopoly and / or oligopoly. How else can top execs adopt and sustain an entitlement mentality with respect to their own pay? If the vaunted market forces actually worked (and they don’t appear to) then companies under competitive pressure would look to keep costs under control – right to the top. But they aren’t really under competitive pressure in NZ….and rarely ever are among the big organisations and corporates here.

    Comment by Steve (@nza1) — October 18, 2012 @ 3:10 pm

  19. What private companies pay their executives should be their own business. The problem I have is Kiwisaver. Kiwisaver effectively mandates that I have to put a substantial amount of my money into either bonds cash or shares. Because it is de facto compulsory, accountability is lost. Fund managers care very little about the individuals for which they are managing funds, and get sucked into accepting executive pay rates. None of this would matter if everything was voluntary, but thanks to Cullen it no longer really is.

    Comment by swan — October 18, 2012 @ 3:28 pm

  20. Yeah, it’s not as if you can opt out or anything.

    Comment by thepcavenger — October 18, 2012 @ 3:37 pm

  21. High pay for poor performance is typically a problem of capitive boards and weak shareholder incentives, the issue here is that despite the outlandish pay the typical shareholder owns a tiny portion of any one company, and is unlikely to find it worth the trouble trying to organise a rebellion against irresponsible pay awards. Like the hapless restaurant diner at a big party, facing a menu in the full knowledge that the bill will be split between 30 or 40 other people, the shareholder realises that there is little point in scrimping when everyone else will order steak and champagne. A regulator could bring more discipline – if a sufficiently capable one exists (and there is alot of literature about regulator capture, information assymetries and incentives that suggest otherwise).

    So could a large shareholder: governance research has found that CEO pay is linked much more tightly to credible measures of performance when there is at least one substantial shareholder to take the policing role.

    Further where you have weak shareholder incentives, there is often a long term corrective discipline that comes into play – which is the corporate raider who can see theres a lot of money being left on the table by shareholders and an offer better than there current value improves the discipline and efficiency of the business, which has long term gains for the wider economy (albiet sometimes with short term pain as reality finally catches up with the business). Management buyouts are another source of when money has been left on the table by weak shareholder oversight/strategy.

    Comment by WH — October 18, 2012 @ 3:38 pm

  22. The problem I have is Kiwisaver….. Because it is de facto compulsory, accountability is lost. ….None of this would matter if everything was voluntary….

    To save you the Herculean task of typing “kiwisaver opt out” into Google, here’s a link to the IRD KS-10 paperwork.

    It’ll take you all of 5 minutes and cost you 70c in postage.

    Comment by Gregor W — October 18, 2012 @ 3:51 pm

  23. “My argument with the maximum wage idea is more basic. What problem is it trying to solve? “
    Danyl, the problem is that any economy has a finite pool of money, so high salaries increase the proportion of wealth held by the rich, leaving the poor without enough to survive and have a dignified life. This has the consequence of grinding the economy to a bit of a halt (because the poor spend virtually all their cash, which feeds back into shop owners, manufacturers, etc; wealthy often store a lot of their cash in financial instruments). This is what you called “…the finance sector suck[ing] money out of the productive economy.” Sure, the rich have superyachts built in Auckland, but that doesn’t have the flow-on effects of ‘productive’ investment, like building infrastructure everyone uses (roads, rail, power dams, etc) or furniture factories, etc.

    There is the exception of those economies that engage in ‘quantative easing’, but the proportion of wealth held by rich and poor *within* that economy doesn’t really shift (there are caveats around loans, but…). QE is more about adjusting relative strength of one currency against others, those that QE have their currencies devalued, which lets them boost exports and cut imports.

    Comment by bob — October 18, 2012 @ 3:55 pm

  24. WH
    It’s funny you say that, because I just end up pissing off the Nigerians. Also, some dodgy americans who were trying to “sell” a holiday package (get my credit card details) under the guise of a free airfare. He went on his spiel about the good quality of nature in Florida, but promptly lost the facade when I asked him matter-of-factly if there was a casino there with blackjack (good card counting opportunity) and whether the croupiers were sharp or relatively lazy.

    Comment by Dan — October 18, 2012 @ 3:57 pm

  25. “It’ll take you all of 5 minutes and cost you 70c in postage.”

    It’ll cost me my employer contribution (read part of my salary), and my government contribution (read part of my salary).

    So I can opt out, I was aware of that. But I have to forfeit several thousand dollars of salary a year for the privilege.

    Comment by swan — October 18, 2012 @ 4:07 pm

  26. Yeah, there needs to be less stringent opting out criteria.

    Comment by Dan — October 18, 2012 @ 4:51 pm

  27. I don’t think the politburo were enjoying lifestyles like this:

    Comment by OECD rank 22 kiwi — October 18, 2012 @ 6:11 pm

  28. @swan – so do what I did and negotiate it into your base salary.

    This has worked for me with 2 employers when I pointed out to them it wouldn’t cost any more.
    Yes, initially it ‘cost’ me the 1k way back when but I eventually caved and joined anyway.

    Comment by Gregor W — October 18, 2012 @ 8:04 pm

  29. It’ll cost me my employer contribution (read part of my salary), and my government contribution (read part of my salary).

    If the emploer contribution is part of your slary then it would simply transfer to your take home pay, like wise the govt contribution. Because they don’t, it shows that they are not. Thanks Dr. Cullen.

    That’s money you are getting because the govt mandated it for you, and here you are pulling a ‘Now we see the violence inherent in the system’ routine.

    Comment by Pascal's bookie — October 18, 2012 @ 8:05 pm

  30. Pascal’s bookie, that is nonsense. My salary is my value to the company, net of all the costs. My company charges me out at a set amount – they cant just tell the client to pay an extra 2% because I have decided to join kiwisaver.

    Comment by swan — October 18, 2012 @ 8:41 pm

  31. Gregor W, you cant contract out of an employer contribution, or the ability to join kiwisaver. If you did, your contract was illegal.

    Comment by swan — October 18, 2012 @ 8:42 pm

  32. What are you talking about?
    I opted out and negotiated a 2% pay rise to my base directly to offset it. Same as you can negotiate any term of your contract.

    Comment by Gregor W — October 18, 2012 @ 8:48 pm

  33. Plus PB is correct. 2% is deducted from your gross rem.
    If choose to opt out, it turns up in your nett. The hit you take is on the employer contribution and the one off credit.

    An employer who values you will recognize that and compensate you directly – in my experience anyway at least.

    Comment by Gregor W — October 18, 2012 @ 8:52 pm

  34. Any term of your contract? What are you talking about?

    I havent taken a sick day in about 5 years, but I cant contract out of sick leave. I cant contract out of minimum wage or annual leave laws. I cant contract out of health and safety obligations. etc etc. If you signed a contract that said “I promise to never join kiwisaver in exchange for a 2% pay rise”, then the contract was illiegal.

    Comment by swan — October 18, 2012 @ 8:52 pm

  35. I didn’t make a promise. I negotiated an adjustment to my base rate in lieu of my employers KS contibution when I made it clear I didn’t buy into it.
    When I switched employers I got a new contract and later, chose to take up KS.

    But you are correct: all terms was an exaggeration. Any terms accept those that would materially contravene the ERA.

    For example, you can certainly negotiate terms of leave. My contract says 4 weeks like yours no doubt, but I negotiated a buy back as I don’t take much leave.

    Comment by Gregor W — October 18, 2012 @ 9:03 pm

  36. Gregor W @ 17, wow, way to go twisting what I said.
    Yep, we have a brain drain now. Why? Because the overseas is interesting and we all want to spend a bit of time over there lapping it up. Also, at quite modest experience and skill levels, pay rates are often higher overseas than here, bonus!

    But if you increase that pay differential too much (say, by introducing a salary cap) then you risk increasing the brain drain in the echelons affected.

    “Organisations are effective as a result of their culture.” I agree with that. What has the biggest impact on culture? That’s right: the leadership. So if you pay (relative) peanuts, don’t you think you might get (relative) monkeys? Then your culture might be a bit like that of a chimps tea party.
    If you were to go looking for a new job in your chosen field (Council Climate Change Coordinator? Diversity Officer? What is it you do?) and you had a choice of two councils very similar in culture and location*, but one council was paying $85,000 plus car and the other was paying $75,000 without benefits, which would you think would be more attractive to you?
    (This is the economists’ proviso of “all other things being equal”)

    Comment by Clunking Fist — October 19, 2012 @ 1:51 pm

  37. (Gah: you probably thought it was a trick question since I added a car to the remuneration package, and, of course, a Council CCC would never choose a car! So change that to “annual bus passes for you, your partner and dependents”.)

    Comment by Clunking Fist — October 19, 2012 @ 2:13 pm

  38. @ CF

    I don’t think I twisted your words. To me, you made a pretty clear causal statement: salary caps for CEOs will result in a brain drain. If you intended to describe salary caps across the board, then yes, I accept your premise; just not for CEOs.

    If they were that good and could command vast remuneration elsewhere, then they would go elsewhere unless there was another, non-financial reason for them to stay (i.e lifestyle, family commitments). Those driven by salary who are at the top of their game will always go to pastures greener – let them go. Trying to compete in that salary ‘arms race’ is pointless.
    So my question is, if the key determinant is non-financial in any CEO’s decision to domicile in NZ, why are we constantly being told that we need to up the financial benefits for CEOs to “attract the best”?

    Using the all things being equal position*, like a CEO, of course I would go for the larger pay packet.
    But that is not your premise. Your premise is that if your environment is not equal (NZ vs offshore), would you chase the money? For that I can categorically say “No”.
    Since marriage and kids I have turned down repeated and very lucrative offers (rejoining a former employer in the ME) as the trade-off of lifestyle vs. money was not worth it.

    Lastly, pay peanuts, get monkeys: agreed. So why do we in NZ routinely pay gold bricks for monkeys?

    *obviously a flawed assumption as, in terms of employment and location, things can’t actually be equal (unless the offers happen to come from the same organisation for different roles)

    Comment by Gregor W — October 19, 2012 @ 3:03 pm

  39. Crickey, it’s not even clear to me what @38 is even about. Are you defending salary caps, but only for CEOs, not for anyone else? That’s fine, we’ll just relocate our Head Office overseas to avoid the cap, or rename our CEO “MD”, or split the role into CFO, CIO, COO, etc. But as Danyl asks “What problem is it trying to solve?”
    You just seem to be loath to admit that the idea is dumb and will have consequences that we can only imagine. (How did the wage/price freeze work for people? Carless days? All examples of central planning madness that cut across economic reality: prices went up but wages didn;t, two car families laughed all the way to the gas station, etc.)

    Comment by Clunking Fist — October 19, 2012 @ 3:33 pm

  40. “onviously a flawed assumption as, in terms of employment and location, things can’t actually be equal (unless the offers happen to come from the same organisation for different roles)”
    Um, for the purposes of breaking a problem down into its constituent components to isolate the effect of changing one variable at a time. Ordinary folk call it “comparing apples with apples” and use it in everyday life.

    Comment by Clunking Fist — October 19, 2012 @ 3:37 pm

  41. To clarify:

    I think capping (x20) is indeed a valid idea for CEO salaries. As per comment #5, I also pointed out that the idea is neither untried nor unorthodox.
    I also agree with Danyl that it will not necessarily resolve the broader issues we have with wider failures in our political economy. However, I don’t regard the ideas as mutually exclusive.

    I think a salary cap, most particularly for State CEOs, is a matter of good governance and perception – no one should become rich working for a public organisation as a matter of principal. For private companies, it’s a matter for shareholders. But again, CEO are working for the shareholders – not enriching themselves at shareholders expense – and they need to be reminded of that occasionally. A salary cap might encourage that thinking.

    Finally, I understand the concept of “apples with apples”. I just don’t think in this case, “apples with apples” thinking applies given that human motivation is pretty inconsistent and weighted for all sorts of reasons.

    But if you want to be incredibly simplistic then yes, all things being equal, I like everyone else would go for the money if no other factor was at play.

    Comment by Gregor W — October 19, 2012 @ 3:59 pm

  42. “As per comment #5, I also pointed out that the idea is neither untried nor unorthodox.”
    Ah, France. I met a few Frenchies in London. They endure the food for what they called “good” jobs in London that are unavailable to them in France because that country is not as much a meritocracy as the anglophile countries. So salaries are capped: have you made a study of the fringe benefits available to the people in power in France? The “allowances”? Car-and-driver, credit card for the wife, job for your daughter/son-in-law, etc.

    “I think a salary cap, most particularly for State CEOs, is a matter of good governance” Set a cap that has the potential to rule a number of the key players out of the market? Good for governance..?
    “perception” Oh agreed there, but we are grown-ups and reality sometimes has to take precedence over perception.

    “But if you want to be incredibly simplistic then yes, all things being equal, I like everyone else would go for the money if no other factor was at play.” Thanks for confirming that. So why can’t a NZ company offer $5 million plus a kiwi lifestyle to someone who might command $10M in New York?

    Comment by Clunking Fist — October 19, 2012 @ 4:27 pm

  43. It is funny how righties become incoherent on the mention of “France”. Cognitive dissonance I suppose.

    Comment by Sanctuary — October 19, 2012 @ 4:35 pm

  44. Do we want a bunch of “key players” extracting seven figure salaries from the taxpayer? You might, I don’t.

    Comment by richdrich — October 19, 2012 @ 9:32 pm

  45. Maybe read my comments again CF, rather than cherrypicking.

    What “key players” would be ruled out by State SOEs CEO salary caps? Business Gods of the private sector? They wouldn’t go to into the State – they’re already cashing it.

    What youmight rule out is the politically connected chisellers who think it’s OK to milk the taxpayer from their cushy sinecures. The same people who often as not when you look at their bios, have often not held down work of that level (or any work) outside of the narrow confines of the domestic administrata.

    As for the private sector, like I said that’s up to shareholders and the Boards.
    I just question the logic of of offering such massive salaries when it’s not really necessary.

    As a recent example could Paul Reynolds $10.7m final year rem incl. $2m severance really be justified in terms of his CEO performance?
    A $30m payout over his tenure: SP went from $4.47 to below $2 and both revenue and nett profit (43% down from 08 to 09 FY) and basically static from then until structural separation.

    Nice work if you can get it.

    Comment by Gregor W — October 19, 2012 @ 11:25 pm

  46. 45.Maybe read my comments again CF, rather than cherrypicking.
    Oh, so you’re restricting the salary cap to the state sector? Apologies.

    “What youmight rule out is the politically connected chisellers who think it’s OK to milk the taxpayer from their cushy sinecures.” Now you’re talking about Helen and Cullen (and Jim and Jenny and Ruth) and whatshisfacethedisgracedMP in Afganistan?

    Paul Reynolds: nice,pick on a company that had its natural monopoly taken away from it. You lefties can’t have it both ways: force a company to open its network to its competitors and than lean back and wonder why its share value tanks.
    “Nice work if you can get it” So why don’t you get it? Do you think you have the same skills as Reynolds? Are lefties narcissistic: can’t imagine/handle the fact that the guys and gals with these skill levels are on a different planet from us mortals, so want to cut the buggers down to size? Do you really think you could run a political party or a UN organisation like Helen?

    Comment by Clunking Fist — October 20, 2012 @ 10:10 am

  47. I’m siding with CF for once.

    Comment by Dan — October 20, 2012 @ 11:31 am

  48. @ CF – Yes. I broadly include ex MPs in my definition of “commented chisellers”.

    Re Reyolds – the company had it’s natural monopoly removed prior to him taking the helm under Operational Separation. As you say profits would have been affected regardless.

    Which speaks to my point – why pay an absolute premium for an imported Chief Executive and allow his performance package to be based completely on meeting competitive targets in a regulated market? It makes no sense. It’s basically giving shareholder money away.

    Further, I have not said I could do a CEOs job. I can’t do a plumber’s or a brain surgeon’s job either.
    What is at issue is the value of the CEO role and in Reynolds case, his specific value to his employers (the Shareholders of Telecom) in that role.
    In my opinion – and I suspect I’m not alone here given that the new CEO is on about $2m/pa incl. incentives – it wasn’t c. $8m a year.

    Comment by Gregor W — October 23, 2012 @ 9:37 am

  49. Reynolds presided over the structural seperation, which seemed to me to go pretty smoothly

    Comment by Clunking Fist — October 23, 2012 @ 1:19 pm


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