03 June 2014

How much is a CEO worth?

After reading the article in Saturday's paper this should be a question that people ask and debate. According to the article Walkerville's CEO is costing each ratepayer  nearly $30 ($ 219,601) and Prospect's $11.54 ($241,995). The highest paid CEO is Adelaide with a salary of  nearly $400,000. Their task is quite complex but I always have trouble when calculating how much we should pay our own CEO. As I sit on the CEO's Performance Committee this matter is one I need to discuss and inevitably comparisons are made. We often use Campbelltown as a comparison as it is most similar in size and rate revenue.  I can still remember sitting on the same committee when we discussed paying the then CEO, Ron Green, a salary in excess of $100,000 (nearly 20 years ago), we thought this amount was outrageous and yet we paid it as this is what the market place demanded at the time.

Ratepayers sizing up the cost of CEOs
Adelaide Advertiser, Adelaide  by  Miles Kemp31 May 2014

RESIDENTS in small council areas are paying up to 19 times as much for their council chief executives' salaries, the Land Taxes Reform Association has revealed.
The association has used the comparison of CEO salary packages, which in Adelaide range from $398,000 to $216,770, compared to population size to show how badly off residents of Adelaide's numerous small councils are in comparison to larger councils.
In Walkerville, the CEO's salary package of $219,601 is the equivalent of $29.89 each year for each of the area's 7345 people, but in Onkaparinga, the CEO receives a $260,000 package, or the equivalent of $1.57 each year for each of the 164,977 residents.
The association will within weeks release a booklet which aims to educate electors about council comparisons.
"We think it is fair that voters are able to look council by council at where their money goes before they vote," Association spokesman Bruce Pennington said.
The association is chaired by independent MP John Darley who was a past ValuerGeneral of South Australia, and has campaigned against large rates increases.
Council rates in Adelaide in the last ten years have increased by $251 million more than inflation and $209 million more than the councils' own inflation figures.
In Prospect, where residents pay the second highest rates for a CEO salary package, the CEO salary package is $241,995, which is the equivalent of $11.54 for each of the 20,969 residents each year.
A range of council revenue other than from residents, such as parking fines and Commonwealth Government grants, means ratepayers and resi
dents do not have to pay the entire salary bill, but Prospect Mayor David O'Loughlin said residents of smaller councils paid comparatively more.
Residents in all of Adelaide's smaller councils pay comparatively more for CEO's salaries that those of larger councils; in Norwood Payneham and St Peters the equivalent of $6.92 per person each year, in Holdfast Bay $6.66, Unley $6.18, West Torrens $5.17, Burnside $4.90, Campbelltown $4.80 and Mitcham $4.01.
"The CEO role attracts a CEO salary to some extent, regardless of the size of the organisation, which is one downside of a smaller-scale enterprise, but there are many benefits," Mr O'Loughlin said.
A Walkerville Council spokeswoman said: "Our CEO does not feel it is appropriate to comment - she is on a performance-based contract, which is rigorously reviewed annually

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