SOE director fees under review

Thursday 2nd February 2012 1 Comment

The fees paid to directors of State-Owned Enterprises are under review this year with any changes likely to kick in from July, according to the Crown Ownership Monitoring Unit.

In its Briefing to the SOE and Finance Ministers, the Treasury unit said the review of the way Crown company director fees are set is underway and will be completed in the first half of the year. The review already has Cabinet approval, and has been twice delayed.

“Ministers will need to consider the outcome of the review, and whether or not they wish to make any changes to director fee levels by early May 2012,” the report said. “If the government decides to proceed, this will include consideration of how potential mixed-ownership of some companies needs to be addressed in terms of setting board remuneration.”

The briefing comes against the backdrop of the government’s plans to sell down minority stakes in its energy companies and holding in Air New Zealand. The government hopes to raise up to $7 billion from the programme, and is in the process of consulting with Maori tribal groups to iron out any potential Treaty of Waitangi issues currently enshrined in the SOE Act.

COMU said it has been putting a “strong emphasis on shareholder returns” and is trying to ensure companies have a balance between reinvesting in the business and paying out dividends, which has been half that of NZX companies.

“The government has indicated it will be looking to entities to achieve an appropriate balance between dividend levels and reinvestment in the business to enable free cash flow being generated from the SOE portfolio to be directed into high value uses elsewhere on the Crown’s balance sheet,” the report said.

All of the SOEs and Crown entity Television New Zealand will be subject to continuous disclosure rules in the early part of 2012, COMU said.

(BusinessDesk)

BusinessDesk.co.nz

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Comments from our readers

On 3 February 2012 at 7:35 am Desmond Hunt said:

Care must be taken on the level of director fees being set. After reviewing the Directors currently sitting on these SOE`s there is definitely a need for some to be replaced with more experience directors who have a sound tract record in the private sector. Des Hunt, Corporate Liaison Director, NZ Shareholder Association.