Orion CEO's pay rise 'unacceptable'
A Christchurch City councillor says a hefty pay rise for Orion New Zealand chief executive Rob Jamieson is unacceptable.
It was reported today the boss of the council-owned electricity lines company had received a 30 per cent pay rise in the past year.
Jamieson was paid between $720,000 and $730,000 in the March 2014 financial year, the annual report shows. In the previous year he was paid between $540,000 and $550,000.
Councillor Glenn Livingstone said there was no question an increase that large was unacceptable.
"It's not a personal thing, but look, that's way out of touch in a low-wage city," he said.
"The increase is almost two times what councillors receive annually."
Livingstone praised Jamieson's work, but said there was a disconnect between what was paid in the corporate world and what people in everyday Christchurch earned.
Cr Raf Manji questioned whether private-sector salaries should be paid to what was essentially a public monopoly, and called Jamieson's pay "excessive".
"I would like to see a bit more pay restraint," he said.
Manji said how the salaries of chief executives of council-owned assets were set was something the council should discuss after the Cameron report - which will provide options for improving the council's financial health - is released later this month.
The new pay takes Jamieson above what Canterbury Earthquake Recovery Authority chief executive Roger Sutton was paid in his final year as Orion boss
Sutton resigned as Orion CEO in May 2011 and the 2011 annual report put top staff remuneration for the 2010 and 2011 financial years between $680,000 and $710,000. Jamieson took on the role in August 2011.
Orion said in a statement today that when Jamieson was taken on Orion agreed to pay him an incentive payment if his performance was satisfactory over the three years to the end of August 2014. The one-off payment was to be about 15 per cent of his base salary.
The board had decided Jamieson had more than met the requirement in the way he had managed Orion's recovery from the earthquakes and its significant rebuild investment in trying times in the past three years, the statement said.
In the March 2014 year he has been paid half the incentive payment, which accounted for his pay increase. The other half is to be paid in the year to March 2015.
Orion said Jamieson's pay was below the market median for his position equivalent during the last three years.
"It is absolutely critical that Orion has strong leadership and management, and that the company has a chief executive that is a high performer with technical expertise, that can also offer stability to the company and stakeholders," Orion said.
Christchurch City Council owns almost 90 per cent of Orion with the Selwyn District Council owning the rest.
ORION TO TAKE ON MORE DEBT
The electricity lines company has reported a net profit of $50.5 million but wants to take on higher debt in the next few years as it continues a quake recovery plan.
The profit for the year to March 31 was just ahead of the prior financial year's $49m.
The company has paid its owners $34m in dividends, up $2m on the previous year. The dividends are paid to ultimate shareholders Christchurch City, through its investment arm Christchurch City Holdings Ltd (89.3 per cent), and the Selwyn District Council (10.3 per cent).
Orion chief executive Rob Jamieson said it was a sound financial performance by the the electricity distribution company, which was taking on debt for capital investment but at the same time keeping costs under control. The network was damaged in the 2010 and 2011 earthquakes.
Orion's interest bearing debt at March 31 was $76m. The company forecast this would grow by $135m over the next three years to March 31 2017 to around $211m.
This was because it planned significant capital expenditure. It increased capital spending to $84m in 2014, up $13m from the previous financial year. In 2015 it planned capital spending of around $78m.
But debt would remain within prudent levels, Jamieson said.
"2019 remains our target for getting the network back to the same level of resilience and reliability as pre-quake. That's on track."
The company's assets were now valued at over $1 billion, up by $110m from the prior financial year, with some of that gain due to revaluations.
Revenues increased to $268.2m from $260.9m, backed by increased demand as the city rebuilt after the quakes, he said.
Orion is targeting a net profit of $48m in 2015 and $51m in 2016.
Earlier this year the Commerce Commission released a decision allowing Orion an 8.4 per cent increase in lines charges to apply from April 1 and gave a five year guidance on the prices the company was allowed to charge.
Jamieson said Orion thus would not initially be part of the Commerce Commission's latest draft decision on allowable returns for power and gas lines companies.
That decision could cut New Zealand consumers' bills by about $33m a year.
Electricity use in the network's region was recovering, and the number of new connections to Orion's network increasing, he said. As a result of extra work, Orion had increased staffing levels by 10 per cent since the quakes, to 180 employees, with contractor numbers also up.