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1. Let there be no executive pay rises that are above the
rate of inflation.
2. Let there be no bonus’s given that are not a recompense
for exceptional service and results.
3. Let there be no salaries grossly in excess of the level of
that paid out to the country’s Prime Minister.
4. Let there be no Boards of Directors who are unwilling to
keep executive salaries under control.
5. Let there be no chief executives employed who are not
willing to live within these parameters.
6. Let there be no executive severance packages greater
than the limit imposed by three month’s salary.
7. Let there be no tax loopholes for anyone and in particular
for those earning over $100,000p.a.
8. Let there be no tax funded advances to public companies
that are not prepared to work within these limitations.
9. Let there be no contracts that over rule conscience.
10. Let there be no secret deals, let transparency rule the day.
© Norman E. Brookes 2012
Time to change our “Bank”?
Why am I appalled to learn that the New Zealand branch of the Westpac Bank is paying its chief executive a salary of over $5.5m per annum? Maybe it’s because I thought we as a country had decided that we are living in times that call for restraint, for moderation. Maybe it’s because I thought that a significant proportion of the population is out of work, and that others barely earn enough to live on, and that somehow we need to spread the money around. Maybe it’s because I thought that it was the banks, along with the New York Stock Exchange that somehow got us into the economic situation we are in and that they especially need to set the example in restraint and moderation.
It seems I was wrong. In spite of a bit of tightening up here and there, all the signs are that the banks will go on being the banks and the stock exchange the stock exchange. It was reported in the Herald on Saturday 20th November that the CEO of the Commonwealth Bank in Australia, a New Zealander, is earning $20.5m per annum, while three other Australian banking CEO’s were earning in excess of $7m per annum. This is not a criticism of the chief executives who may well be excellent people for the positions they hold but rather it is a criticism of Westpac and the other banks who engage in similar practices. If this is the bankers idea of restraint, or moderation, then it is time the people, the customers, rose up and called “foul”. But we the customers need to wake up. We in the Churches need to wake up.
I believe that we need to challenge the myths we are often fed. Take for example the myth that “if you pay peanuts you get monkeys”. I believe that there is very little truth in that assertion. There are many very talented people who work for a comparatively modest salary, and there are many others who get their satisfaction from tasks well done, challenges to be surmounted, and not from the actual amount of financial recompense they receive. Personally, I’m glad that in the Methodist Church of New Zealand, we have a policy that includes the payment of a standard stipend. That is all ordained ministers (presbyters) get the same stipend whether they are fresh out of Theological College or are the President of the Church! No one enters the ordained ministry to get rich in a monetary sense but many would affirm that there is a richness to be found in serving Christ.
I have long held the view that the most important and most demanding task in this country is the task we give to the Prime Minister. I understand that the Prime Minister is paid approximately $375,000 per annum plus $19,000 in allowances -
Christians believe that “the workman is worthy of his hire”, we also believe that we are called to give of our best to the tasks to which we have been appointed. One of the outcomes of the Protestant Reformation was the affirmation that people are to “work for the glory of God”. So we are not opposed to wages or salaries, and are on the side of excellence. But we are also called to care for the weakest and most vulnerable in society and to do that we need to ensure that the monetary cake is spread across the whole whether that whole be all the employees in our banks and other institutions, or society at large. Locking in hugely excessive salaries for the benefit of relatively few people means that thousands of others actually receive less in the long run. It is wrong and it needs to stop. If it doesn’t then it is time to change our bank, that is, if we can find a bank with the courage and wisdom to act differently!
© Norman E. Brookes
This longer article gives the context for the Ten Commandments for the Commercial World, it was first published in the New Zealand Herald on line.
The Occupy Movement no longer occupies the Aotea concourse by Auckland’s Town Hall but recent headlines in the Herald remind us why the movement came into being. Its seed was the inordinate greed evident in the Wall Streets of this world, greed that has clearly not left New Zealand unscathed. Pause to consider the most recent headline: “Combined pay tops $5.5m for bosses of four energy firms”. Four people each earning over a million dollars a year! Each person we were told received a rise of over 11% whereas the average wage increase in NZ in 2010 was 1.7%. This one headline was symptomatic of a number of others in the Herald during the last twelve months. Here are some examples: April 30, 2011 “More $5 million men as earnings climb” (there were four, the CEO’s of Westpac, Nuplex Industries, Telecom and Fonterra, each with a salary of over $5m per annum); October 26 2011 “SkyCity presses on with fee raise vote” (this took the directors’ fee pool from $1m to $1.5m); February 27, 2012 “NZ tax on rich among the lowest in the world” (shows the other side of the equation, in the UK high earners face a 50% tax rate on their income). All of which in New Zealand is not simply scandalous it points to a systemic evil.
Why? The reality is, that when we look at a company, be it an energy company, a bank, a telco, or whatever, we discover that there is in fact only so much money to go around. The earning power of a company however efficient it might be is circumscribed by its customer base. It is that base that provides the cake and it is the cake that is sliced up in order to pay all who work for the company from chief executive to the lowliest staff member, not forgetting the shareholders. So the outcomes are clear. When the chief executive receives a huge salary and bonuses then others in the company’s workforce pay the price and receive correspondingly less. More often than not the “less” falls most heavily on those in company positions that are perceived to be at the bottom of the heap, but others pay the price as well.
I am not arguing against those who have put in years at university, or those who have greater skills, or who are capable of taking on greater responsibilities, being paid more. I agree with that. But the truth is that what has happened in our society is far from being just that, it is completely over the top. A guideline for me would be this. No one occupies a more responsible position in this country than the Prime Minister, a person whose salary is less than $400,000 a year, and who has to live under media scrutiny virtually every day. Consequently the Prime Minister has a greater accountability to the population at large than any other CEO in the country. Furthermore the main bonus that he or she may receive by virtue of good leadership is to be elected for a further term. While the PM’s salary is well above the average wage (approximately $54,000), it is a mere pittance when compared with what some CEO’s in this country receive. This, in my view, demonstrates the grossly excessive nature of the annual payments to many CEO’s.
But who is at fault here? Principally I believe it is the Boards of Directors and the share holders that support them. Boards of Directors who advocate such excessive salaries need to be called to account by shareholders for it seems that far too many have been seduced by oft quoted slogans such as “if you pay peanuts you get monkeys”. I believe that is nonsense. I believe that there are people in our society who aspire to challenges, who rise to responsibilities, and who get far more satisfaction in delivering excellence, than they do in the extensive nature of any pay packet offered or received. I believe that there are many people who have a respect for their fellows, a commitment to ethical living, and who are not driven to obtain the highest possible financial packet for themselves at the expense of others. Let the Directors seek them out and if they don’t let shareholders call the Directors to account.
Christians are all familiar with the Ten Commandments. It seems to me that Boards of Directors, and CEO’s need a “Ten Commandments of their own”. So, let me end with ten “commandments” which I believe if taken seriously, even in part, could make an impact and call us back to some kind of sanity ...(see above left):
The World Economic Forum in Davos, Switzerland, suggested that “severe income disparity” is the biggest risk facing the world. It is time to face up to it here in New Zealand. Someone once said “economic recovery requires a moral recovery, it is a spiritual crisis”. If that is right, if this is a “spiritual crisis” then clearly the challenge for the Church is to give a lead.
© Norman E. Brookes (Rev)
Manukau, Auckland, Northland Regional Superintendent, Methodist Church of New Zealand.