NZX slow to follow pack on pay

Firm more forthcoming about new chief

NZX investors will be feeling the irony of the stockmarket operator releasing its new code of corporate governance this week.

The code recommends all listed companies reveal the pay details for their chief executives including a breakdown of salary, short and longterm incentives and other bonuses in their annual report.

Just three months ago the NZX released its 2016 annual report which showed its top earner got paid between $2.86 million and $2.87m last year — a big jump on 2015 when its highest earner was paid between $1.11m and $1.12m.

Investors can only assume that former chief executive Tim Bennett, who left the company at the end of last year, received a big pay-out.

But the NZX has declined to disclose a further breakdown of the top payee’s earnings.

Under the new regime which will come into force from October 1 they would have had to reveal the details or cite a good reason why not.

Perhaps in an attempt to smooth the way forward the NZX has been much more forthcoming about the pay of its new chief executive Mark Peterson.

Peterson, who was officially confirmed as the new boss last month (April 10) after being in the acting role since January, will receive a salary of $500,000 which will be reviewable annually, a short term incentive payment of up to $500,000 per year and a long-term incentive payment of up to $250,000 per year based on achieving certain key performance targets.

Other majors

The change should force some major companies to include details of their chief executives’ pay packages.

In the Herald’s 2016 survey of CEO pay nine of the top 50 companies did not include details about what their top brass earned — including the likes of Fonterra, Infratil and Steel & Tube Holdings.

Some have since changed their approach.

Perhaps the best part of the recommendation is that remuneration will be reported in a standardised way showing the breakdown rather than just one headline figure.

Diversity flavour

The code should also give a better idea about what listed companies are doing to promote gender and cultural diversity within their businesses.

Companies already have to report how many men and women sit on their boards and at executive levels.

But now they will have to have a written diversity policy which must set measurable objectives for achieving diversity and will have to report back on how well the company is meeting them.

If a firm fails to make progress shareholders will be able to get a flavour of a company’s true approach to diversity. Given the number of reports showing greater diversity has a positive influence on the bottom line it cannot be ignored.