Better late than never, in the case of some, including the Warehouse Group of companies which took $67.8million and returned a full-year profit for the most recent financial year of $44.5 million.
It has taken the company a while to get the message on this issue. As far back as June, the Prime Minister said she was angry at the company pushing on with restructuring while receiving the wage subsidy. As well as laying off hundreds of staff, hours were cut back for others.
In October, the group’s chairman was still defending the taking of the subsidy, but now its sales for the first quarter of the new financial year show an increase on the previous year, it made the decision to pay back the money.
Withholding the repayment has not been a good look for this company and we wonder whether it lost some customers over its tardiness.
Two of the country’s other major companies, Ryman Healthcare and the Summerset Group, the biggest players in the retirement village market, also announced this month they were repaying the subsidy.
Ryman took $14.2million in wage subsidies and paid $44million in first-half dividends to shareholders, attempting to justify this by pointing to its spending on PPE, extra staff and extra cleaning associated with the pandemic response. It was not convincing.
We understand Summerset, which received $8.6million and paid out $13.7million in dividends for the first half of the year made similar arguments and also said it had been affected by the temporary lull in the sales of units.
We agree with University of Auckland accounting professor Jinaught Wong when he was quoted as saying these big companies needed to find their moral compass and pay the money back.
If companies had the cash to pay dividends, they did not need the wage subsidy.
The wage subsidy scheme swinging into action so quickly on a high-trust basis was appropriate in a time of great uncertainty. Perhaps with some extra time a system would have been developed to require paying back subsidies if companies turned out to quickly return to profitable trading.
However, in the absence of such a system, ethical behaviour must come into play and we hope any companies still shilly-shallying on this issue will find the needle on their moral compass quickly in the New Year.
AND ANOTHER THING
We hope the Covid-19 crisis is prompting companies to take a fresh look at multimillion-dollar or high six figure salaries for chief executives and consider whether the difference between that pay and that of their lowest paid workers is too large.
It was fascinating to read comments this month from Summerset chairman and former trade unionist Rob Campbell saying many senior executives were paid salaries which did not reflect the complexity of skill of their role compared with others.
That will be no surprise to many underlings.
He says society is looking for more social responsibility in business actions. Business is responding to that, but senior executive pay systems involving high, automatically escalating and narrowly incentivised structures are not a good fit.
Mr Campbell understands if the country is to meet targets on climate change, environmental reform, poverty and inequality and lift productivity, the status quo is not the answer.
Running business in the interests of all, using the skills of all, and in the process eliminating status and hierarchy in favour of involvement and inclusion is what he would like to see.
That ideal is far from being realised, but as the old saying goes, if you never have a dream, you will never have a dream come true.
