Theresa takes a swipe at Telecom salaries
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Posted Fri 5 March 2010 @ 7:11 a.m. by Ernie Newman
Theresa Gattung seems to have saved the release of her book for Telecom's moment of most extreme misery. I'll be reading it. Despite some fundamental differences in view I enjoyed the interaction with Theresa when she was CEO, and will be interested in her perspective a few years on.
According to the Herald, a key focus is her questioning whether the current senior staff of Telecom deserve such generous pay, given the decline in the company's fortunes and profits.
Having a whack at corporate salaries is always a good way to win populist support. However, its pretty unusual for a departed CEO to attack the salaries of not only her successor, but many of the executives who she herself appointed to senior roles.
So although executive remuneration is way out of scope of TUANZ's brief, let me offer one observation.
In Theresa's and Roderick Deane's day, Telecom survived by extremely skilful lobbying. For longer than any incumbent in the OECD it persuaded compliant governments not to regulate in internationally-orthodox ways. Despite being a public company it acted as though it was a government agency, promoting the myth that "what’s good for Telecom" and "what's good for New Zealand" were one and the same thing. Through that skilful lobbying it saw off most of the competition - it simply didn't have to compete. Except, of course, in the mobile market where it failed dismally during Theresa's time.
That's why profits were extremely high.
Fast forward to the Reynolds/Boyd era. There's competition everywhere. Its in the fixed lines, ISP market, and mobile. Now its even in the underlying infrastructure as Telecom faces a battle royal with the lines companies to retain its dominance. It a hellishly tough market out there. The Telecom of old was protected from competition by its success in keeping regulation at bay. The new Telecom Reynolds inherited was like the All Blacks going into the World Cup without a warm-up game - soft and unready for battle. That's the challenge Reynolds and Boyd have had to face. XT aside, my sense is they’ve been making good progress.
So in summary, Theresa's Telecom depended on outstanding lobbying, while Paul's is totally dependent on beating off the competition in an almost totally open market.
Remind me again - in which era do the executives deserve more?
Categories: Fixed line carriers | Wireless carriers