Scant pay details on CEO salaries

LEGAL LINE: Christchurch City Holdings chairman Bruce Irvine says the companies supervised by CCHL are meeting the legal requirements of disclosure.
LEGAL LINE: Christchurch City Holdings chairman Bruce Irvine says the companies supervised by CCHL are meeting the legal requirements of disclosure.
Christchurch's council-owned trading companies are telling ratepayers the legal minimum about their chief executives' salaries compared with state-owned enterprises.

The pay of Lyttelton Port chief executive Peter Davie has soared by $600,000 to $1.02 million in 2012 from the year before when his salary package was about $420,000.

On Wednesday, Lyttelton Port Company (LPC) chairman Rodger Fisher was reluctant to discuss it.

He said the pay packet was made up of a base salary, short and long-term incentives but would not provide a breakdown.

LPC's annual report is skimpy on information.

It shows the highest salary was $1.02m but has no explanation about the jump in Davie's salary nor any breakdown of its components.

Even the city council's investment arm, Christchurch City Holdings Ltd (CCHL), had to ring and ask about it.

By contrast, the level of detail about the salary of Don Elder, chief executive of Solid Energy, is far greater in the company's annual report for 2012, published last week.

There are similar details about the salary of state-owned Meridian Energy chief Mark Binns but not as much as about Elder's.

Elder's $1.1m pay package was broken down into components of base salary, short and long-term incentives and how much he earned in each and what he could have earned if his performance had excelled.

The information about the salaries of chief executives at council-owned Orion, City Care and Christchurch International Airport are also pretty thin.

They state the top-earning salary but no information about how it is made up, except for some details in the airport's report that states chief executive Jim Boult's $650,000 pay package included an annual incentive fee earned in 2010 of $125,000.

Asked why the companies supervised by CCHL did not meet the standard set by Solid Energy, CCHL chairman Bruce Irvine said: "We meet the legal requirement.

"I don't see a need for any more disclosure than we are providing.

"We don't have any need for more disclosure from them in terms of their annual reports because they meet all their legal requirements and we are satisfied with those in terms of their published documents."

Irvine said, as the port firm was listed on the New Zealand sharemarket, CCHL had no supervisory role even though it owned nearly 80 per cent of the shares.

It was up to LPC's board to decide on disclosures and LPC had met its legal requirements. Davie received a long-term incentive bonus over a three-year period all at once and that was a large part of the extra $600,000.

CCHL had been satisfied with that explanation.

University of Canterbury professor of finance Glenn Boyle said LPC stated in its annual report remuneration of directors and executives "is transparent, fair and reasonable".

"It may well be fair and reasonable and it probably is, but it's certainly not transparent."

It was even hard to tell whether it was fair and reasonable because there was no information.

"And they don't say anything about executive remuneration at all, so they are just doing the minimum required."

Some information about the general pay structure could be expected.

"If I was a shareholder in LPC . . . I wouldn't be all that happy about learning the CEO had got a 150 per cent increase in remuneration in a year when the return to me was minus 15 per cent."

The NZX's "adjusted [share] price series" shows port company shares fell from $2.33 at the beginning of the year to $2.05 at the end.

The firm might think its disclosure was enough "but it's perfectly reasonable to ask why is it sufficient for them but clearly Meridian Energy and Solid Energy don't think it is sufficient", Boyle said.


Glen Boyle says all companies that make use of public money in some way must disclose salaries in bands of $10,000 of those earning more than $100,000.

They do not have to reveal who is earning the $100,000-plus but do have to provide the number of people.

Companies must disclose exact directors' payments and, if the chief executive is also a director, then his exact pay has to be revealed, too.

Otherwise, there is no requirement to spell out in detail the chief executive's pay package.


CCHL subsidiary companies' CEO 2012 salaries:

LPC - Peter Davie $1.02m.

Airport - Jim Boult, $650,000.

City Care - Onno Mulder $520,000.

Orion - Rob Jamieson $460,000 (seven months chief executive and five months general manager commercial).

The Press