Chapter 18: Remuneration and expenses for board members

Setting fee levels that are sufficient to attract and retain talented board members is an important element of effective governance. Members do not set their own fees, remuneration and allowances but boards should understand how these are set and how to engage with the relevant fee setting authority when fees are reviewed.

Sections 47 and 48 of the Crown Entities Act 2004 (CE Act) provide two different mechanisms for setting the remuneration and expenses of board members:

• Crown Agents and Autonomous Crown Entity (ACE) members' remuneration and expenses are set by the Responsible Minister under the Cabinet Fees Framework. The framework is contained in Cabinet Office circular CO (09) 5 (www.dpmc.govt.nz/cabinet/circulars/co09/5.html). The Framework is reviewed periodically, so entities need to be sure they are working from the latest version.
• Independent Crown Entity (ICE) members' remuneration and expenses are set by the Remuneration Authority under the Remuneration Authority Act 1977.

When a Crown entity board (including an ICE) establishes a committee or a subsidiary, the board itself becomes the fee-setting authority and should then follow the provisions in the Fees Framework.

In general:

• Board chairs are paid more than other members in recognition of their more substantial role;
• Deputy chairs and those members who chair committees are paid an additional amount on top of their member fee;
• Members who receive an annual fee for board membership do not generally receive additional payment if they are a member of a board's committee; although there may be exceptions in other legislation. Members who receive a daily fee for board activities can, however, be paid for additional days spent on committee work;
• Independent members of board committees (ie, those who are not on the entity board) may be paid a fee, up to a maximum of the daily equivalent of the full member fee. The Auditor-General suggests the fee should be at a level that reflects the time it takes to properly carry out their duties. For example, it may be based on a percentage of the fee paid to a board member; and
• Board members who receive a daily fee for board activities should not be paid when they have not attended a meeting.