Local authority chief executives are boosting their pay packets by “empire-building”

By Paul Walker 18/04/2013


The following link is to a TV3 news item in which Dr Glenn Boyle, professor of finance at Canterbury University, discusses his recent paper in which he shows that that some local authority chief executives are boosting their pay packets by “empire-building”. Boyle found that councils which collect the most revenue per ratepayer also pay their chief executives the most. The pay rate is not related to things the amount of infrastructure the councils controls but is related to the additional hiring of bureaucrats.

http://www.3news.co.nz/Empire-building-CEOs-boost-pay/tabid/370/articleID/294292/Default.aspx

Scoop reports,

A new study by UC finance professor Glenn Boyle and former UC student Scott Rademaker found councils which collect the most revenue per ratepayer pay their chief executives the most.

“While this could indicate that chief executives with more revenue to manage have more complex jobs, and hence deserve to be paid more, it turns out that the additional revenue is primarily used to employ additional council personnel,’’ Professor Boyle says.

“The more bureaucrats a council chief executive is able to employ, relative to the size of their ratepayer base, the greater the remuneration he or she is able to extract on average. Chief executives who have increased personnel costs the most during the 2005-10 period have, on average, received the biggest pay rises during that time. In short, council chief executives are being rewarded for good old-fashioned empire building.