I’m not a naive person. I know that there are people out there in the corporate world that deserve huge salaries. But there is a limit.
The case of the new chief executive for Telecom, Paul Reynolds , is a case in point.
He’s being paid $1.75 million dollars, with the same amount in performance incentives. Plus, if he decides to hang around long-term (more than 2 years) then he’s eligible for another $1.75 million.
He was probably on a good whack at BT, from whence he comes. So the salary really isn’t that surprising.
What is surprising are the perks that get added to this huge amount of dosh.
Ten business-class flights between New Zealand and Britain for him and his family
That’s $17,577 per trip. 10 trips = $175,770 and this is only if he is taking his wife and one child. He has twin daughters at varsity in the UK…they presumably will want to come out her at least three times a year, adding $35,154 to the travel bill.
I don’t have a problem with that.
$100,000 towards accommodation for the first 2 years
I’m assuming this is $100,000 per year – $200,000 total. Seems a bit excessive…I’m guessing he could afford to buy a house on $1.75 million – what’s the $100K for?
$20,000 for legal bills around his contract
Honestly, if he wanted the job surely he could pay for his own lawyer…$20K represents 1.14% of his salary without bonuses.
$6,000 a year for tax advice for two years
Again, surely he can pay for his own accountant? This represents less than one days work on his base salary of $1.75 million.
So, how long does he intend to stay? Perhaps because Telecom feel they need to give him another $1.75 million for a long term incentive then their expectation is that this job is just a filler.
The other shocking revelation is that they had to pay Marko Bogoievski a $819,000 bonus so he would stay while they looked for a replacement for Theresa Gattung – this is the job that he thought he was in the running for – no wonder he could name his price.
And acting chief executive Simon Mouter got a bonus of $250,000 for exactly the same reasons.
All of this results in lower dividends for the shareholders. The thinking must be that Paul Reynolds is going to lift the company from the doldrums. We will have to wait some time, and inevitably a few business-class trips to the UK to discover if that is true.