‘Ridiculously overpaid’ CEOs pay high price
Former Westpac boss David Morgan says company chief executives are ‘‘ridiculously overpaid’’ but the intense pressure of the job causes some to ‘‘literally weep’’ in private.
A new biography of the former bank chief and senior Treasury official details how he took to mentoring executives after his time leading the bank, in part because life as a chief executive was ‘‘seldom openly discussed’’.
‘‘Most people don’t talk about it honestly,’’ Morgan said in an interview with the book’s author, journalist Oliver Brown.
‘‘Yes, CEO life is very glamorous. You’re recognised, you’re given the best seats in restaurants, and you’re ridiculously overpaid. But you need stamina. As the leader, you rarely play the grand final, but more an endless succession of semifinals,’’ Morgan said. ‘‘You can hardly ever relax, and that creates intense strain. Behind closed doors, some CEOs literally weep.’’
Morgan was chief executive of Westpac between 1999 and 2008, and his pay topped A$10 million (NZ$10.4 million) in 2007 before he was succeeded by Gail Kelly.
The biography, David Morgan: An Extraordinary Life, was launched at Westpac’s office in Sydney.
The function was attended by senior Australian business and political figures including former prime minister Paul Keating, former premier Bob Carr and his wife Helena, Westpac CEO Brian Hartzer, Morgan’s wife Ros Kelly, a former Labor minister, former Treasury secretary and Westpac chairman Ted Evans, former Treasury secretary Martin Parkinson, and Mike CannonBrookes Sr, who set up the US bank Citi in Australia.
The comments come amid recent debate both about the size of CEO pay packets, and the risk of burnout.
Investor anger over multimillion-dollar remuneration reached new heights during annual meeting season, with a raft of Australia’s biggest companies, including Westpac, NAB, ANZ, AMP and Telstra, receiving big protest votes.
Some of the most experienced directors in the country have acknowledged in recent times that all is not right with Australia’s executive pay system, with Telstra chairman John Mullen famously declaring executive pay was ‘‘too high across the board’’.
At A$4.36m, the pay of the typical ASX100 CEO is about 52 times the average wage of A$83,486, but the money comes with high expectations.
National Australia Bank’s former CEO, Andrew Thorburn, faced public criticism from some quarters over his plans to take four weeks’ long-service leave following the release of the banking royal commission report in February. Thorburn reversed the decision after he was singled out for criticism in the report, and resigned a few days later.
His chairman, Ken Henry, later defended the board’s approval of Thorburn’s planned leave, saying he had served as CEO (including of NAB’s New Zealand arm) for 10 years, and ‘‘I wanted Andrew to have the opportunity to continue to lead NAB for several more years’’.
The book says Morgan was aware from his time running Westpac that CEOs ‘‘almost invariably carried some concerns that they could not share with their boards, their peers, or even their spouses’’.