Income Equality Aotearoa New Zealand Inc.
Closing the Gap
Media Statement for Immediate Release
13th August 2019
“Any justification for paying exorbitant salaries to senior managers in business has just been buried in the Fonterra debacle” said Peter Malcolm spokesperson for Income Equality Aotearoa New Zealand Inc---“Closing the Gap”
“The decisions made by previous chief executives are now shown to be financially disastrous yet these people have walked away with multi-million dollar salaries and bonuses. The financial mess they left behind risks the livelihood of both staff and farmer shareholders”.
Fonterra this week announced losses of up to $675 million, .... and the previous CEO Leo Spierings is STILL due to get some more of his bonus and over 18 months ago 24 top managers where paid over $1,000,000 a year and of these, three were on over $3,000,000 a year
“Presiding over this long standing litany of mis-management have been successive boards of directors who were deluded into offering badly designed incentives to senior management.”
Particularly disastrous has been remuneration that is based on short term performance targets while ignoring the long term stability of the company.
Those past board members and former chief executives should now explain to staff and shareholder farmers how they allowed this to happen. They should refund their high fees, salaries and bonuses and admit they failed.
None of this should be a surprise. Research has shown that management bonuses invariably capture only the short term performance of a company while being blind to long term financial sustainability.
These salaries and bonuses also ignore the fact that a successful business is the product of all the staff whether they are tanker drivers, accounts clerks or senior managers. A failed CEO walks away with multi-million dollar bonuses while the staff are left to carry the can from their bad decisions, including the risk of that business failing completely.
‘I challenge directors of all companies to
follow those commercial leaders who have seen the wisdom of
spreading remuneration more evenly throughout the business
in recognition that success is dependant on everybody who
works there. A more humble approach from boards and chief
executives is good for the company and all its staff. The
rot now being exposed in Fonterra has now destroyed the
concept that inflated bonuses that measure short term output
is good for any