The Warehouse chief executive Mark Powell.
The Warehouse chief executive Mark Powell. Brett Phibbs

Warehouse CEO admits his pay is ridiculous

THE Warehouse Group boss Mark Powell thinks his $1.7 million salary package is a ridiculous amount of money.

And he has the backing of the Shareholders' Association, which wants companies to limit their chief executives' base pay to no more than 20 times the average wage of $54,700. That would put them on just over $1 million a year.

But a Herald survey of some other top executives showed a handful were paid far more than that - including ANZ's top boss David Hisco ($4.1 million) and Fonterra's Theo Spierings ($3.5m-plus).

Mr Powell's total pay packet is about 50 times the average of staff in his business and 31 times the average wage.

He told business journalists last week he earned a "ridiculous amount" and it troubled him.

He told the Herald that while he may not have an answer on what an appropriate salary was, questioning how much goes into the pockets of some company bosses was a timely debate.

"It's a lot of money, you can't deny that. Whether it's too high, I'm not too sure on that. What I do know is it is ... it is more than most people will earn ever.

"And when you earn a lot of money you have a responsibility to think about that and that's where the word 'troubled' comes from.

"Do I think I get paid a lot? Yes, I do. Does that trouble me? Do I think about that? Yes, it does."

Mr Powell said he asks himself if enough is being paid to staff on the shop floor within the group - at The Warehouse, Warehouse Stationery and Noel Leeming stores.

The company's "career retailer wage" for trained staff with more than three years' experience was announced last year, meaning qualifying staff will have their wages bumped up to anywhere between $18.50 and $20 an hour.

Mr Powell said he limited his own pay rise last year to no higher than what frontline staff got - 1.75 per cent.

"The question of how much is getting to the front line should also be asked. And I'm not trying to tell everyone how to run their businesses ... people have the right to ask questions and criticise."

And he makes sure he donates a large amount of his income to charity.

"I personally think there's a responsibility to give to charities and organisations that hand out to society. I don't live extravagantly. I come from a very working class background, where there wasn't a lot of money growing up and I do feel incredibly privileged and with that comes responsibility."

Mr Powell was born in Wales where he attended a state school. His father was a steel worker and his mother a nurse.

He has lived in the same community, outside central Auckland, for 11 years and drives a "second-hand Japanese import".

"One of the wonderful things about New Zealand is if you are reasonably well-off you don't live in a gated community with a separated society, where the gap between the rich and poor is ridiculously big."

Mr Powell pays $551,920 in tax, according to the Inland Revenue's online tax calculator.

John Hawkins, chairman of the Shareholders' Association, said some chief executives were paid far too much "given their performance".

Companies often employed consultants to advise on pay rates and they often advised at the higher end because they "don't want to annoy the company".

He said it was too easy for CEOs to get short-term bonuses and believed three or four years to be an adequate vesting period.

"And even when CEOs leave the business, they shouldn't be able to collect them until that time has elapsed so that they don't wind things up to suit, and run.

"They actually have to leave the business in a good condition, so that incoming management are not landed with something that requires a lot of work."

Xero chief executive Rod Drury is also the owner of the company and last year paid himself $355,000. He said about six of his staff are paid more.

"Our major issue is we are hiring very senior people all over the world. To get the best people, we do pay big salaries to get senior staff," he said.

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