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NZ Super Fund on track to hire new CEO in June as board lobbies to keep control of pay

Thursday 24th May 2018

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The Guardians of New Zealand Superannuation are on track to appoint a new chief executive next month, as the board lobbies to keep control of setting the top manager's pay packet. 

The manager of the New Zealand Superannuation Fund has yet to replace its founding CEO Adrian Orr, who took up the governorship of the Reserve Bank in March. It hired Caldwell Partners to run an executive search and installed chief investment officer Matt Whineray as acting CEO before the global search kicked off in March. 

The agency advertised the job on March 31, calling for an executive with "substantial experience in international investment" and a "detailed understanding of the workings of investment markets and global best practice portfolio management". The person for the job needs "the gravitas and personal presence to represent the NZSF in New Zealand and internationally" and will face a high level of Parliamentary and media scrutiny, the ad said. 

While that search is currently live, fund manager's board went to Parliament seeking to retain control of the CEO's remuneration in a submission on the State Sector and Crown Entities Reform Bill. The legislation aims to apply more consistent regulation of conduct and remuneration for public sector senior managers, while also giving the State Services Commission greater powers of investigation. 

When announcing the bill, State Services Minister Chris Hipkins said "a high level of public concern that the levels of pay for the highest paid chief executives is excessive", and the NZ Super Fund board attracted a rebuke from former Prime Minister Bill English over its hike in CEO pay last year. 

Guardians chair Catherine Savage appeared before Parliament's governance and administration select committee yesterday, urging politicians not to include the fund manager in the act. 

"While we respect the government’s right to be consulted, and are committed to transparency and accountability regarding our decisions, it is important that the final decision over CEO appointments and remuneration rests with the board," Savage said in a statement. "Removing the fundamental responsibility for appointing and remunerating the CEO from the board, as provided for in the proposed bill, undermines our accountability for delivering results. It also opens up the possibility of political interference and short-term decision making." 

A Cabinet paper on the bill noted the requirement for Crown entity boards to consult the State Services Commissioner about CEO terms and conditions as potentially contentious in terms of perceived consequences, "such as a reduced ability to attract the best chief executives or a diminished sense of responsibility by the board for chief executive recruitment and performance."

That uncertainty hasn't derailed the current appointment process, and a spokeswoman said the NZ Super Fund board is "on track for an appointment in June". 

The Guardians also oppose a five-year fixed-term appointment as being inconsistent with the long-term purpose of the fund. The Public Services Association also opposed the fixed term element, saying it "will further undermine both state services careers and effective management of senior executive talent".

In a separate submission, the Institute of Directors said appointing and managing CEOs is "one of, if not the, most important function of a board" and setting pay was "critical". 

"We are concerned the change will diminish the board’s ability to fulfill their core role of appointing and managing a CEO," and said it opposes the proposed change. The governance association also opposed the five-year fixed term saying it might restrict the board's ability to hold its senior manager to account. 

"Having a fixed term for CEOs may have unintended consequences such as deferring the removal of a CEO if the end of the term is approaching or potentially increasing severance settlements to cover the remainder of a term to remove a CEO," Institute of Directors general manager of governance leadership centre Felicity Caird said in the submission. 


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24th May 2019 Morning Report

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