Powercos defend bosses' wage hikes
Million-dollar plus salaries for the bosses of energy companies are on the rise as Kiwis feel the winter chill and associated soaring power bills.
Figures obtained by the Sunday Star-Times reveal the chief executives of five of our biggest energy companies are on salaries topping the $1m mark; with Contact Energy's Dennis Barnes the top earner, receiving a salary of $1.58m in the 2012-13 financial year.
During a year in which power prices continued to rise and thousands of Kiwi families battled what Green Party MP Gareth Hughes described as "energy poverty", Barnes received a $279,674 pay rise.
Genesis Energy chief executive Albert Brantley's contract was upgraded to between $1.35m-$1.36m, depending on bonuses, from the $1.2m-$1.21m package he had in 2011-12.
Depending on bonuses, now-departed Transpower chief executive Patrick Strange earned between $1.22m-$1.29m in the 2012-13 financial year; up from $1.05m-$1.059m. He departed Transpower in February, being replaced by Alison Andrew.
Hughes described the pay rises as "excessive", after consumers had been stung with power price increases of 22 per cent over the past five years.
"When you see CEO salaries well in advance of $1m, at a time when a quarter of New Zealand families are struggling in energy poverty, you have to ask yourself, ‘Are these salaries justified?'," Hughes said. "What we are seeing is super profits being made by the power companies and super salaries made by the executives. And it is the struggling Kiwi businesses and families who are paying.
"To any reasonable person, these salaries are over-inflated and obscene when you see the 290,000 Kiwi kids, many of them who have working parents, who are struggling in real poverty." The companies with million-dollar CEOs defended the upgraded packages.
A spokesman for Contact Energy said Barnes' pay rise was linked to an increase in fixed remuneration and also an increase in his short-term incentive payment.
"The variable remuneration reward is based on achievement against pre-specified target levels of performance across the year based on Contact's strategy and business plans and is assessed by the board," the spokesman said. "The fixed remuneration increase recognises his skills and experience and reflects market levels." The spokesman said Contact was committed to providing the best and most economical service to its customers.
"In December 2013 we announced we would not be increasing residential electricity or gas prices prior to review in April 2015, other than to account for changes to network, transmission and metering charges, which are out of Contact's control but are passed through to customers as part of their bills," he said.
"We have a number of payment options available for customers, such as smoothing direct debit payments out across the year to avoid the mid-winter bill shock, or our online prompt payment option for residential customers, which offers a discount of up to 22 per cent on a customer's bill when they pay on time, via direct debit or internet banking."
Transpower said its CEO's salary included an "at risk" component, which was dependent on achieving key objectives. The latest increase was in "recognition" of the achievement of these objectives; including the successful delivery of Transpower's major capital build programme, which came in under budget and on time.
Transpower corporate communications manager Rebecca Wilson said: "The Commerce Commission sets a fixed allowance for all of our operating costs, which includes all personnel costs. Once this is set, any increases in our operating costs, including salaries, do not flow through to consumer transmission prices." Genesis Energy said in a statement: "The chief executive's remuneration is internationally benchmarked and set by the board of directors. It is published annually for shareholder information. We have no further comment." Figures released by Energy and Resources Minister Simon Bridges on Tuesday showed power prices had increased in the year ended March 2014 by 2.3 per cent.
The latest rise was driven by a 6.7 per cent increase in line charges. The energy component, however, had fallen 0.7 per cent.
Hughes said the latest rise in power bills, coupled with the pay rises, highlighted the need for reforms in the energy sector.
"Right now people are opening their power bills with trepidation and fear, and seeing the relentless price increases," he said.
The Green Party has proposed the creation of NZ Power - part of its "Empowering New Zealand" policy - which it says would save New Zealanders around $300 a year from their power bills.
THE CEO'S PAY CHEQUE
Contact Energy: $1,582,892
Mighty River Power: $1,300,894
Sunday Star Times