Australian banks reaped returns from their NZ subsidiaries that exceeded the collective profits of almost all NZX-listed companies, University of Auckland economics professor, Tim Hazeldine, told an Australian industry symposium last week.
Hazeldine told the Paul Woolley Centre workshop in Sydney that his analysis of 110 NZX stocks showed their combined profits fell below that extracted by the ‘big four’ Aussie banks from their respective NZ offshoots.
The finding was an aside in Hazeldine’s efforts to establish a link between CEO remuneration and the value they provided.
He told the Paul Woolley Centre crowd – featuring both academics and practitioners from the funds management industry – his research shows NZ listed company CEOs are remunerated mostly according to the size of the company they manage.
And their pay has increased by 85 per cent, adjusted for inflation, in the past 20 years, Hazeldine said.
The study found NZX-listed CEO pay in 2014 ranged from $110,000 to over $3.8 million with the average topping $700,000 per annum.
Hazledine said that ‘real wages’ (after inflation) for the CEOs in the time period between 1995 and 2014 had increased by 13.5 per cent a year. “Is this an explosion?” he asked.
He also suggested that, given the correlation between CEO pay and the organisation’s size, pay could reflect an increase in managerial responsibilities, which he termed “managerial bloat”.
His ‘Tip of the Iceberg? Determinants and implications of CEO pay in NZ private and public sector organisations, 1995-2015’ study group consisted of 110 (“almost all”) NZ-listed stocks, excluding fund companies, he said, because they were too difficult to analyse for their underlying assets.
According to its website, the Paul Woolley Centre, headquartered at the University of Technology Sydney, was established to “research dysfunctionality in financial markets, and the financial institutions that operate within these markets”.
* Greg Bright is publisher of Investor Strategy News (Australia)