'My pay is high' says Westpac CEO

Westpac NZ CEO George Frazis says his high pay can be hard to explain especially compared with his immigrant father's

5th May 11, 12:47pm by Gareth Vaughan

By Gareth Vaughan

Westpac New Zealand CEO George Frazis says his almost NZ$6 million annual pay can be hard to explain, especially compared with the salary made by his house painting immigrant father.

Frazis' remuneration for the year to September for th for , disclosed in the Westpac Group's annual report last November, showed he received a total of A$4.38 million, equivalent to almost NZ$6 million at today's exchange rates.

News of his pay led to significant media coverage given it's among the highest for New Zealand executives, was described as "unethical" by bank workers' union Finsec, and came under fire from Labour and Green MPs.

Asked about it at Westpac's interim results briefing yesterday Frazis acknowledged his pay was high.

"The thing with executive salaries is they are high," Frazis told interest.co.nz.

"I look at my father who was an immigrant. He has worked as a painter all his life, it’s hard to explain."

"(But) at the end of the day executive salaries in Westpac are determined by the board, they are very much performance driven and it’s on public record in terms of what they are," Frazis added.

Frazis' 2010 pay was not too far short from being as much as the combined A$5.03 million received by his counterparts at ANZ and BNZ, Jenny Fagg and Andrew Thorburn. It compared with A$2.6 million for the period of the 2009 financial year he worked for Westpac after moving from a group executive general manager role at BNZ's parent National Australia Bank, where he received A$336,380 in the 2009 year. Frazis took the helm at Westpac in March 2009.

Finsec campaigns director Andrew Campbell said, in November, it was unethical to pay such a large salary to one person while the economy faltered and the average worker had seen no, or limited, wage growth. He also noted the remuneration covered a period when the banks were covered by the Crown retail deposit guarantee scheme.

Frazis’ pay comprised A$967,330 in fixed remuneration, A$1.29 million in annual cash performance awards accrued during the year, A$292,613 of non-monetary benefits which Westpac says covered Frazis relocating from Sydney to Auckland, accommodation payments and travel between Australia and New Zealand.

He also received superannuation benefits of A$14,586, A$399,634 worth of options, plus A$1.4 million worth of unhurdled share rights.

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25 Comments

by FCM | 5th May 11, 1:05pm 1304557540

Im sorry George all I heard was Oink Oink Oink..Slurp slurp..oink oink oink

by Andrewj | 5th May 11, 1:12pm 1304557920

The same guy who just said ...

"New Zealand is at risk of talking itself into a slower economic recovery than necessary unless people adopt a more confident approach, Westpac chief executive George Frazis says.

"The recovery, however, requires New Zealand to move from caution to confidence, because we can actually talk ourselves into a slower recovery. "Westpac was picking strong economic growth (gross domestic product) of about 4.7 per cent for 2012. "Debt reduction in recent years by households and businesses would free up money for growth and investment, Mr Frazis said." http://www.stuff.co.nz/business/money/4962939/Westpac-boss-calls-for-Kiwis-to-show-confidence Never have so many paid so much to so few, who are so out of touch with so many.

by hamrod | 5th May 11, 4:30pm 1304569808

on that logic I'll just talk my boss into doubling my salary, talk my customers into paying twice as much for our services. of course! its so obvious!

by Anon good nurse | 7th May 11, 10:44am 1304721852

Just like the suckers and shysters who are still convinced that ludicrously over-valued markets can be sustained by "confidence" alone.

Olly Newland springs to mind.

by Neven911 | 5th May 11, 1:15pm 1304558100

I want to know the name of the bastard thats holding a gun to his head forcing him to accept this package. "executive salaries in Westpac are determined by the board' who are also well paid because well they have to determine such renumeration. This is the most pathetic justification of unconsionable greed I have ever heard, I think he should have just kept his mouth shut

by Dannte | 5th May 11, 2:29pm 1304562579

Someone "...holding a gun to his head". Premanition?

There will be a time when such obscene salaries will face repercussions. These people do not have a clue about how history will be repeating.

by Neil | 5th May 11, 1:26pm 1304558780

I thought everyone was upset that NZers were leaving to go to Australia because they can't earn a decent pay check. Being able to pay someone $6 mil a year ought to give people hope that there are some high paying jobs left here.

Plus it's coming out of shareholders pockets why do the rest of you care? If you're a Westpack customer and think they charge you too much ... move banks! If you're a Wespack employee and think your worth more go to the market, there are plenty of banks out there.

by Dannte | 5th May 11, 2:46pm 1304563607

It's Frazis and his board chums who cook their own soup. Damn hard for small investors to get rid of such nits because the big investors are also in collusion with the directors because they are also nits of the system. One crow doesn't hack out anotherone's eye. It stinks to the heavens.

And the customers and employees are the sheeple. Changing banks is changing rapists.

by scarfie | 5th May 11, 6:55pm 1304578508

Changing banks is changing rapists

Outstanding.

Did you know that any rapist that breaks into a home to perpetrate his crime is normally charged with Burglary also? (Def: Breaks and Enters with intent to commit a crime therein)

by sHr0oMaN | 5th May 11, 1:36pm 1304559412

Please, show me one person who will turn down more money. That's just stupid to expect people to do so.

Rather buy some Westpac shares and remonstrate with the board during the shareholder's meeting.

by childofthesun | 5th May 11, 1:46pm 1304559968

Why Frazis feels the need to justify his remuneration escapes me. If it's hard to explain, sounds like he's not very confident about why he's worth it or not.

This is the same guy who's telling NZ to be less cautious and more confident, i.e. we've got heaps of money to lend you because you've been paying off debt and saving too much and now we need you to get back into debt and start spending it on stuff that you don't need. Don't you know how banks make money? Does this sound familiar? Isn't that how we got into this mess in the first place with the assistance of a few derivatives and mortgage backed securities?

Less interested in hearing Frazis try and explain his salary and more interested in hearing a bit of detail around what sort of debt he'd like us to carry and why?

by Gareth Vaughan | 5th May 11, 2:11pm 1304561496

He told me yesterday that a third of Westpac's home loan customers are ahead on payments and businesses had done a great job of improving productivity and reducing costs. Hence I think Westpac is open to lending to both businesses and for home loans.

by childofthesun | 5th May 11, 2:41pm 1304563312

Thanks Gareth, I did read the bit about homeowners being ahead on payments. I should think that they're keen to lend to business to help spread the risk away from a less than secure housing market.

by Gareth Vaughan | 5th May 11, 4:52pm 1304571172

There's more on this from George Frazis in this story that has just gone up - http://www.interest.co.nz/news/53287/westpac-nz-ceo-george-frazis-says-…-

by childofthesun | 5th May 11, 3:21pm 1304565663

Ostrich, there are indeed differences and it seems that the Australian market for the banks is going to be a bit tough for the next 12-24 months. Dare I say it that the average Ocker has a more carefree attitude to incurring debt and the ability to pay and/or repay is less of a concern to Bruce than it is to his Kiwi cousin.

by Andrewj | 5th May 11, 1:52pm 1304560325

childofthesun, I think you are forgeting the special privilages banks get in our economy. Shall we cut them loose?

by childofthesun | 5th May 11, 2:08pm 1304561296

Cut them loose. Why not. I doubt that the NZ based banks can do it on their own without the implicit guarantee of the government here or for their parents in OZ. The 'too big to fail' argument would be used to ensure that the losses are socialised and my tax bill can help prop up the absence of a sensible credit risk policy.

by Wolly | 5th May 11, 2:16pm 1304561764

It's plainly obvious the silly buggers responsible for determining the salaries and bonuses and pocket change for senior state serpents et al are not doing their job....have to boost the state pay by at least 100% just catch up with the greedy sods in the banks creaming it off the mortgage holders.

by AdrianwithaW | 5th May 11, 3:09pm 1304564994

"Difficult to explain" is pretty weak.

Didn't Andy Fastow say the same thing about the profits of the little company he was working for? What was it called again?

Ah that's right, Enron.

by AdrianwithaW | 5th May 11, 3:46pm 1304567177

The whole "What do they do to deserve it" it an interesting point I've always thought. Do they work 10,000 x harder? Unlikely. Some people say that they're at greater risk of failure, or that they have much more riding on them with an entire company underneath them - but if they f**k up, most of the time they just end up resigning! Which 90% of the time STILL involves a payout!? I'm getting pretty sick of it.

by speckles | 5th May 11, 4:31pm 1304569882

It is connections, I know one New Zealand woman after returning from overseas who turned down one of these roles in New Zealand, she was head hunted, not enough money in it her, she has now taken a new position overseas paying approx. double this. I asked her how she rationalised her market worth..she said it came down to connections. The ability to influence events for the organisation she was CEO for, plain and simple.

by Bernard Hickey | 5th May 11, 8:13pm 1304583201

FYI Here's this statement from Russel Norman on bank profits

Record bank profitability and subsequent dividend payments offshore highlights an on-going structural weakness in our economy, said Green Party Co-leader Dr Russel Norman today.

Dr Norman was responding to the posting of strong half-year profit results from ANZ National, BNZ, and Westpac banks this week.

“For the last reported financial year, these three banks alone sent $1.8 billion out of the country in the form of dividend payments back to their parent banks in Australia,” said Dr Russel Norman.

“This capital out-flow is unsustainable in the longer term for New Zealand Inc. and highlights the urgent need for greater competition in the banking sector, and greater local ownership of our banks.

“Only one bank — Kiwibank — approaches anything like a suitable rival to the big four Australian banks, but it controls just 2.5% of total banking assets compared to 90% controlled by the Australian-owned banks.

“It’s not in New Zealand’s economic interests to remain a wholly-owned subsidiary of the Australian banks,” Dr Norman said.

The 2009 Parliamentary Inquiry into Banking found that New Zealand does not have a competitive banking sector. This lack of competition was found to have cost businesses and mortgage holders up to $2 billion of additional interest rate expenses at the time.

“The Government needs to invest further into Kiwibank to bring it up to the point where it can compete effectively with the big four Australian-owned banks,” said Dr Norman.

by Grant A | 5th May 11, 10:25pm 1304591116

I suspect its not too difficult to explain in reality. Frazis is not forced to work for Westpac, and the board is not forced to pay him $6m unless they want him. Clearly if the board thought they could get the same or a better man for less, they would. The fact that they choose him, and felt they needed to pay him $6m, and could justify that in the context of the size of the business he was to run, it is surely their call and judgement.

How come we think that we know westpac, banking, whatever business, better than the board ?

I'd love his salary, but I'm certainly not going to get into envy blogging.

by me | 6th May 11, 1:46pm 1304646394

The telling point is that often a Board is dominated by the CEO and company professionals.

Same even with many school Boards, the Principal will 'steer' the ship and expect Board members to follow his lead. I was on a Board when a parent member tried to challenge that thinking and it made for a tense situation. Was mainly resovled by most Board members being 'supportive ' of the Principal, which in effect meant accepting his leadership.

Expect Company Boards are probably no different, it's the cult of the CEO that is now common place.

by Grant A | 7th May 11, 1:07pm 1304730420

In this instance I think we can be pretty sure that the extent salary of the NZ Head of Westpac's is determined out of Australia and that he has zero control or influence over that. But you may well right with a number of other local boards