Big pay rises for energy chiefs

Bill English
Bill English
Finance Minister Bill English has defended big bonus payments and pay rises to the bosses of the newly partially privatised energy companies, saying they were paid below market rates when the companies were state-owned enterprises.

The salary packages of the chief executives of the energy companies have significantly increased, with generous bonus payments, since their companies were launched on the stock exchange.

Meridian's Mark Binns, whose bonus is worth 65 per cent of his salary, got a $690,000 bonus last year and a $740,000 bonus this year.

All three companies have introduced bonus schemes for executives, consisting of share packages as well as the cash bonuses already offered.

Bonus payments are decided on by the board and are worth 65 per cent of the chief executive's base salary at Meridian and 35 per cent at Mighty River Power.

The annual reports show Mr Binns' total pay went from $1.1 million in the 2012-13 financial year to $1.9 million last year, including the $690,000 bonus.

After a four-year pay freeze, former Mighty River Power chief Doug Heffernan went from $1.3 million to $2.2 million although that was boosted by the payout of a $500,000 "retention" payment he was offered to ensure he stayed in the job until August this year.

Genesis chief executive Albert Brantley stayed steady on a total of about $1.3 million, including a bonus of $334,000.

His board will decide next year whether he will also receive a one-off $300,00 bonus for his management of the transition to a listed company.

Mr English, the shareholding minister, said it was up to the boards to decide on remuneration, but the increases now reflected commercial market rates for CEOs.

"I think it shows that when they were SOEs they were paid significantly below the market rate," he said.

"I think it illustrates that now the companies are partially floated there's a lot more scrutiny on the performance of the chief executives. They do have to be on their toes. They're under tougher scrutiny to perform."

In its remuneration report, Meridian Energy said that Mr Binns' bonuses were based on the company's financial performance and goals set the year before.

All three companies said it was their policy to give a mix of salary and performance-based payments and to consider comparable payments in the commercial world when deciding on remuneration.

By Claire Trevett of the NZ Herald

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