Government to bump up Crown-owned company directors’ fees

Friday, 8 November 2024

SOE Minister Paul Goldsmith said the fees for directors at the 22 companies on the list had remained largely static for 15 years.

The Government has decided to increase the fees paid to directors of 22 Crown-owned companies, bringing them to 85% of the market rate next year and to 90% of the market rate in 2026.

State Owned Enterprises Minister Paul Goldsmith said ordinary directors’ fees for the companies ‒ listed below ‒ have been largely static for more than 15 years, and had fallen as far as 56% below the market rate in some cases.

The companies are not the ones with a solely commercial focus, which, according to a recent investigation by The Post into what public sector directors were paid, were by far the most generous. The top remuneration went to Dame Therese Walsh as chairwoman of Air New Zealand, paid $270,000 in the year ending June 2023, while her directors were paid $100,000 each, for example.

Mark Verbiest is the chairman of Meridian Energy, and was paid $212,000, while his directors were paid slightly more than $100,000 apiece.

Air New Zealand board chairwoman Dame Therese Walsh is the top paid board member of a publicly owned company.

The directors from the 22 companies listed below have much more modest remuneration for their directors duties, according to the above investigation. For example, the directors of Crown Irrigation Investments are paid between around the $30,000 mark (chairwoman Linda Robertson gets $58,000); Radio New Zealand directors are paid $24,000 (chairman Jim Mather gets $48,000) and Airways directors get between $25,000 to $40,000, while chairwoman Denise Church gets almost $65,000.

Across all companies in New Zealand, the median annual fee for non-executive directors in 2023 was $52,000, up from $51,529 in 2022, with public sector fees dragging the average down.

“This is creating a major barrier to attracting and retaining directors with the commercial skills needed for Crown boards,” Goldsmith said.

“Crown-owned companies, like private ones, are facing an increasingly complex operating environment.

“We can’t expect them to perform as well as their counterparts without giving them the means and direction to do so. Paying fair remuneration is a key part of this.”

Individual increases will depend on the complexity of directors’ roles and the scale of their responsibilities, Goldsmith’s statement noted.

In the most recently completed financial year, the 22 companies generated revenue of approximately $6.3 billion on assets worth approximately $58b.

The Institute of Directors welcomed the announcement.

Union members gather to protest against public sector cuts outside parliament

“We have been advocating for an increase for director fees across the state sector for a number of years,” said IoD chief executive Kirsten Patterson. “We know from our own research that directors of state sector boards have been unhappy with remuneration levels.

“The role of a director is increasingly complex, and the increased median hours worked reflects the added pressure on them. But across all types of boards, remuneration is not keeping pace, and this has been particularly so in the state sector.”

The Directors Fees Report 2024/25, a joint publication between the IoD and EY, showed crown entity boards had the smallest average fee movement in the previous year (3.4% ) compared with 11.3% for statutory boards and 9.0% for unlisted private companies.

While most directors (65%) reported being satisfied with their remuneration Crown entities reported a 0% satisfaction rate, indicating no state sector directors who responded to the survey expressed satisfaction.

“While many directors express a willingness to ‘give back’ to their communities, anecdotal feedback to the IoD indicates many experienced directors were no longer willing to serve on crown entity boards because of the low remuneration levels,” said Patterson.

“Today’s announcement, which will see staged increases over the next two years while still reflecting the ‘giving back’ aspect of serving on crown-owned companies, will help to address these concerns.

“We look forward to seeing this fee increase extending to other public sector boards in due course.”

The companies at which directors’ fees will be bumped up:

Airways

Animal Control Products

AsureQuality

ECNZ

KiwiRail

Kordia

Landcorp

MetService

NZ Post

NZ Railways Corporation

Quotable Value

Transpower

Crown Irrigation Investments

Radio NZ

TVNZ

Kiwi Group Capital

Crown Infrastructure Partners

Education Payroll

N4L

Rau Paenga

NZ GIF

Southern Response