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On Theresa Gattung’s attack on Telecom

March 5th, 2010

One hates to kick someone when they’re down – but when it is former Telecom CEO Theresa Gattung and she is peddling a book in which she professes herself to be shocked (shocked!) by the size of the remuneration packages currently being paid at Telecom, the urge is irresistible. Gattung, like David Lange before her, seems more than willing to criticize the organization she once headed, as if she bore no residual responsibility whatsoever for its current condition.

The gist of Gattung’s complaints is that (a) Telecom executives are being paid too much now. In her opinion, a $7 million salary and incentives package for current CEO Paul Reynolds is intolerable, but her own $3 million package was OK and the $5.4 million payout she received in 2007 was also value for money (b) Labour’s then Telecommunications Minister David Cunliffe played a devious tactical game with Telecom during the reform process (c) the then- Labour Party president Mike Williams sounded her out on becoming a Labour candidate (d) she got treated badly throughout her career because she is a woman and (e) a firm recently considered hiring her, but concluded that she would be “ too strong” and doubted they could work with her.

Taking those in turn… once you get to seven figure salary and incentives packages, I would have thought the little number at the front becomes almost irrelevant. Both her and Reynolds’ remuneration packages are – and were – obscene. I’d have thought it would be quite hard to pocket $3–5 million remuneration packages every year and still claim that you were being discriminated against on the basis of your gender. Apparently not. Put it this way: did Gattung do a really good job of positioning the company for the more competitive environment in which Telecom now finds itself? Did she manage to negotiate productively with a Labour government that was intent on reform, and on ending Telecom’s capacity to screw consumers and the economy for the greater benefit of Telecom shareholders? Hardly.

The reality is that Telecom had wielded its power without compunction for at least 15 years, ever since Richard Prebble turned a state monopoly over to the tender mercies of Telecom’s new owners for peanuts, and without putting any safeguards for consumers (or for business) in place. It was a situation that couldn’t last. The Lange government had created a monster, and National’s Maurice Williamson sat by idly watching this out of control corporate beast pile up the profits at everyone else’s expense, for the entire 1990s.

Yet ultimately, and by her own account, Gattung was finally outfoxed by David Cunliffe and his Boy Scout wiles, for goodness sake. The current plight of Telecom, now that its near-monopoly advantages have crumbled, is an indication of how easy it would have been to run the company in its heyday. A relatively adept chimp – or a robot with no discernible human emotion? – could have managed Telecom during the 1990s. The reason Reynolds is getting paid more – by the wacky logic of the global CEO market – is because running Telecom is now a harder job to do, and now has to earn its keep. I’m not trying to justify Reynolds’ pay packet at all – and his bonuses should be put on ice – but it is the same logic that Gattung once used to employ, when it suited her.

Gattung’s clanging naivete is best illustrated by her anecdote about then Labour Party President Mike Williams supposedly sounding her out on becoming a Labour MP. Memo to TG: this is a negotiating tactic called messing with your mind. I’d wager that it is her particularly blunt set of personal sensors – rather than gender discrimination – that explains why a local firm recently thought twice about taking her on in a leadership role. Ruth Richardson, Christine Rankin, Theresa Gattung… in each case, these are women leaders with a marked inability to show flexibility, to propose and negotiate compromise deals.

In the early 1990s, Telecom was milking the market advantage it had been handed by Prebble and was delaying its capital investment in new technology. That was one prime reason why New Zealand (and its export effort) have lagged so far behind the rest of the world in broadband take-up – which has been merely one example among many of our telecommunications deficit.

That situation is now belatedly changing, largely thanks to Cunliffe’s reforms. There is such karmic irony in Telecom’s problems with its new XT network. Perhaps if the company had given itself more practice in bringing innovations to market during the 1990s, it would know how to do this sort of thing competently. Perhaps the likes of Gattung and Reynolds might then be able to put up a better argument to justify their ridiculous levels of remuneration, current and past.

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    1. 7 Responses to “On Theresa Gattung’s attack on Telecom”

    2. By Daniel du Plessis on Mar 5, 2010 | Reply

      Gattung in 2006:

      “What has every telco in the world done in the past? It’s used confusion as its chief marketing tool. And that’s fine … But at some level, whether they consciously articulate or not, customers know that’s what the game has been. They know we’re not being straight up.”

    3. By Stuart Munro on Mar 5, 2010 | Reply

      We should go with the chimps. A few would raise the IQ of parliament too – and we could have them settle that Shakespeare thing on the side.

      Perhaps we should try to hire Lancelot Link – because there is every sign that NZ has been suffering, for the last three decades, from the influence of Chump.

    4. By SlapDash on Mar 5, 2010 | Reply

      Gothung was the stooge, a puppet – the master was Dean. Dean delivered for the foreign shareholders, because he didn’t have to worry about the customers as RichardP gave him a monopoly.

      So Dean effectively milked the cow until it was a bag of bones.

      Reynolds et al pay is still obscene. No one in Telecom is delivering (nor ever has) the value that justifies this level of remuneration.

      The Shareholders Assoc. are merely trying not to look totally stupid for signing of on this level of remuneration, in this and other public companies. And this is one reason I will never buy shares in publicly traded companies under the current rules/contracts.

    5. By Veracity on Mar 6, 2010 | Reply

      You conveniently forget that Gattung was handed a basket case after years of the very bleeding dry you accuse her of committing, but in fact was done by the American owners, which is incidentally all these yanks ever do, all around the world.
      You also conveniently forget that the competition she was facing at the time was as stiff as it is now, and that the Board has more say about where capital and profits are allocated than the CEO might, like dividends for the owners!
      And for some free advice, if you value being taken seriously at all, then pejorative condescension is not only not becoming, but rather a reflection on the user.

    6. By AT on Mar 6, 2010 | Reply

      Former Telecom CEO Theresa Gattung was smart to sell all her shares over $5. Now the shares are trading only above $2.

    7. By John Thomson on Mar 7, 2010 | Reply

      Instead of “pejorative condescension” as you put it, Veracity, I think Gattung’s comments could more pithily be replied to by quoting the previous PM in another context, “Diddums” I think would do it.

    8. By Emanuensis on Mar 19, 2010 | Reply

      Right on SlapDash!

      Rather then a “Bird on a Wire” Gattung was only ever a “Bird in a Gilded Cage” appointed by Deane so he could continue to control Telecom

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