I am going to express an unpopular opinion by Australian standards, but then I’m hardly a wall flower and have never feared being controversial, so here goes. Please note, this is a little more serious than I normally write, so be warned. BIG news in Australia last week was the CEO of the Commonwealth Bank (one of the top four banks in these parts) got a 75 percent performance related pay rise – that means he only gets it if he meets targets. The CEO, Ralph Norris, has total a package now worth $16.2 million, which apparently makes him the highest paid private executive in Australia. This rise came after he led the bank to a 20 percent net profit of $5.66 billion. Now I appreciate that $16.2 million is a lot of money for people, and that the majority of outrage is coming from people in “normal” earning brackets, but executive salaries like this are a reality in a global market economy – hey that’s what a global economy is all about! People do earn these sorts of incomes and if Australia wants to attract the best people in the business, we have to pay them the big salaries and they have to be competitive internationally. The Ralph’s of the world can get a job anywhere – and many Australian’s are overseas earning the bigger bucks because they just can’t it here! Here’s something published by Reuters http://www.reuters.com/subjects/executive-compensation, and while I’m sure it’s changed, the variations are probably still the same. In the chart in this article, you can see that the Aussie’s are doing OK in the global banking CEO pay scales, but it’s still the US banks pulling in the big bucks, plus Satander of Spain. I couldn’t find anything more recent, but with the global economy improving slightly, I’m sure these salaries have already increased. I really do appreciate that many cannot comprehend how anyone can be worth this much money, but seriously, they are. When people sign up for this kind of responsibility (and package) the company essentially “owns” them. That means 16-20 hour days, 7 days a week, gruelling travel schedules, missed family time, always on call (many are banned from ever turning their phones off – even a cinema visit has to be pre-approved by the board for 2 hours turn-off-time) and that’s just a starter. It is a shit high pressured job and anyone willing to take this responsibility needs to be compensated for it on a competitive scale globally and don’t forget – they only get the money if the company performs beyond market expectations – i.e. they manage to achieve something remarkable. I couldn’t cope with the headache of a CEO job – not anymore. Life’s too short for that shit. I sincerely believe that heading up a public company is a shit job and Ralph Norris (+ everyone else in this bracket) is welcome to it. The magnitude of their package is self-financing and paid for by extra profit the company makes. As an exercise – find a shareholder in CWB and ask them what they think of Ralph’s salary – then ask them how much they have made in dividends/share price appreciation since he took over. It’s a public company, so the public can buy in at any point. I mean let’s think about “salaries” in another field. Hollywood! Does anyone question Russel Crowe earning $30 million or so in a year or even for a movie? Or Nicole Kidman exceeding $20 million? Even ACDC are taking in $30 or so million a year, although after their global tour this year, I’m sure it’s a lot more. The Wiggles are the highest paid entertainers in Australia and even High 5 are in the top 10 earners. Entertainers seem welcome to their fortune, but not hard working, seven day a week, stress heads leading Australia’s very successful economy. They are definitely worth their weight in gold – the successful ones. It’s seems to be an Australian “thing” to get stuck into these issues. I remember it being discussed with passion when an executive at Macquarie Bank got a massive bonus a few years ago, and before that with other bank executives. Friends of mine were absolutely outraged about the “Macquarie incident” and I said, hey that’s what it’s all about in the global financial markets. I obviously elaborated a little more than that. Some people got it, most didn’t. I mean you rarely ever hear of American executives getting slammed in the press for their salaries – except in the last few years with the GFC. But that was a blip. In the US they know that the best people are worth this much and that is all there is to it. The guys (and rarely some gals) in the US also get amazing perks, such as use of a company jet, which wipes hundreds of thousands off the company’s bottom line. In fact, with salaries capped the last couple of years, some of the big execs pissed off to other countries. The money is always there for talent. I sincerely believe that we’ve got to stop slamming these folks, because if it was me, and I was at the centre of all this media bullshit, I’d be getting the hell out. I hate to think that amazing people, who could add so much to our economy and our country, leave because we can’t get our heads around this stuff. It is just a hard reality, and I 100 percent believe that high level executives are worth every cent – especially when they are running successful, profitable businesses, which in turn are making money for the shareholders, and could also be making millions for Australia’s superannuation plans. Who knows, you might actually be benefiting here? But that’s just my opinion. Yours, without the bollocksAndrea PS: I’m on the market for $9 million – a bargain!
