CEOs still banking big salaries
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Tuesday, 3 October, 2000 - 21:00
AT A time when bank fees are escalating at an astronomical rate there is yet another orgy of rewarding salaries and options being paid to chief executives of major banks.
The latest is the Commonwealth Bank. Its shareholders will meet next month to decide if chief executive David Murray is entitled to a further 250,000 options to buy shares in the Commonwealth.
These extra options, if approved, will increase Mr Murray’s total exposure to the company to more than 2.5 million options.
Combined with his 50,387 shares this will mean a total worth of $1.3 million at the current market price.
But it doesn’t end there. Last financial year, Mr Murray earned a salary of $2.05 million.
Westpac’s David Morgan earned $1.7 million in that year, ANZ’s John MacFarlane earned $1.93 million and NAB’s Frank Cicutto earned $1.57 million.
The main issue with the salaries paid to these chief executives is the size of the payment as a comparison against the assets they control.
It is made more interesting when that point of comparison is the Australian economy and the salary earned by the Prime Minister.
The Prime Minister of Australia manages an economy vastly greater than the bank chiefs and earns about $250,000
Let’s examine some of the issues in the accompanying table.
The assets of ANZ bank rose by an average of 4.61 per cent per annum compound over the period. Its CEO’s remuneration rose 29.04 per cent. Is the ANZ so far out of touch with reality that its CEO’s wages as a percentage of the assets that he manages has risen about 23 per cent per annum and that of the CBA and NAB has fallen 3.35 per cent and 7.9 per cent respectively?
The aggregation of some of the figures indicates that the assets of the four major banks combined rose by 5.76 per cent per annum compounded over the three-year period to 1999.
For the same period the fee income of the four major banks rose by 10.17 per cent per annum compound.
Again, for the same period, the executive remuneration packages rose by a staggering 12.75 per cent per annum compound.
The wages of the average employee of the banks over that period has risen by around 3.5 to 4 per cent.
The wages paid by the four major banks are governed by Enterprise Agreements. The agreements entered into by the majors have revolved around a base salary of $28,000 to $29,000.
What conclusions can be drawn from this information?
While there are few greater champions of free enterprise and the capitalist systems than this writer, it does seem there must be a point at which these excesses need to be addressed.
Have we reached that point when the wages of a chief executive are so totally unrelated to the asset base that they manage?
Where is the equity in paying executive remuneration packages that increase at the rate of 12.75 per cent per annum when employee wages rise by a mere four per cent?
Isn’t it time that these issues were addressed and some equity returned to the process?
Perhaps the banks have a social and corporate responsibility issue to deal with.
The latest is the Commonwealth Bank. Its shareholders will meet next month to decide if chief executive David Murray is entitled to a further 250,000 options to buy shares in the Commonwealth.
These extra options, if approved, will increase Mr Murray’s total exposure to the company to more than 2.5 million options.
Combined with his 50,387 shares this will mean a total worth of $1.3 million at the current market price.
But it doesn’t end there. Last financial year, Mr Murray earned a salary of $2.05 million.
Westpac’s David Morgan earned $1.7 million in that year, ANZ’s John MacFarlane earned $1.93 million and NAB’s Frank Cicutto earned $1.57 million.
The main issue with the salaries paid to these chief executives is the size of the payment as a comparison against the assets they control.
It is made more interesting when that point of comparison is the Australian economy and the salary earned by the Prime Minister.
The Prime Minister of Australia manages an economy vastly greater than the bank chiefs and earns about $250,000
Let’s examine some of the issues in the accompanying table.
The assets of ANZ bank rose by an average of 4.61 per cent per annum compound over the period. Its CEO’s remuneration rose 29.04 per cent. Is the ANZ so far out of touch with reality that its CEO’s wages as a percentage of the assets that he manages has risen about 23 per cent per annum and that of the CBA and NAB has fallen 3.35 per cent and 7.9 per cent respectively?
The aggregation of some of the figures indicates that the assets of the four major banks combined rose by 5.76 per cent per annum compounded over the three-year period to 1999.
For the same period the fee income of the four major banks rose by 10.17 per cent per annum compound.
Again, for the same period, the executive remuneration packages rose by a staggering 12.75 per cent per annum compound.
The wages of the average employee of the banks over that period has risen by around 3.5 to 4 per cent.
The wages paid by the four major banks are governed by Enterprise Agreements. The agreements entered into by the majors have revolved around a base salary of $28,000 to $29,000.
What conclusions can be drawn from this information?
While there are few greater champions of free enterprise and the capitalist systems than this writer, it does seem there must be a point at which these excesses need to be addressed.
Have we reached that point when the wages of a chief executive are so totally unrelated to the asset base that they manage?
Where is the equity in paying executive remuneration packages that increase at the rate of 12.75 per cent per annum when employee wages rise by a mere four per cent?
Isn’t it time that these issues were addressed and some equity returned to the process?
Perhaps the banks have a social and corporate responsibility issue to deal with.