Functions and powers of the entity
Boards as leaders: organisational culture
Collective duties of the board and individual duties of board members
Role of the board chair
General responsibilities of members
Members' interests and conflicts: identification, disclosure and management
Disclosure of information
Gifts, benefits and hospitality
Board meeting procedures
Crown entities as employers
Planning and reporting
Board and member performance evaluation
Board appointments and reappointment
Remuneration and expenses for board members
Liability and protection from legal claims or proceedings
Summary of minimum content for a governance manual
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. For further advice regarding the Cabinet Fees Framework, please email email@example.com
- 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 (22) 2 Cabinet Office Circular CO (22) 2: Revised Fees Framework for members appointed to bodies in which the Crown has an interest - 6 October 2022 (dpmc.govt.nz)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. The role of the Remuneration Authority in setting remuneration is set out in Cabinet Office circular CO (11) 7 (dpmc.govt.nz/cabinet/circulars/co11/7).
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.
- 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.
- The annual fees paid to members of governance boards are based on an assumed workload of 50 days for chairs and 30 days for members.
- 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 total annual fee paid to an independent member of a sub-committee should not exceed 50% of the total annual fee paid to a member of the entity board. The Auditor-General suggests the fee should be at a level that reflects the time it takes to properly carry out their duties.
- Board members should not be paid when they have not attended a meeting.
Crown Agents and Autonomous Crown Entities (ACEs)
The responsible Minister determines the remuneration for members of boards of Crown agents and ACEs under the Cabinet Fees Framework. The Framework provides a basis for judgement in setting fees, to: ensure a consistent approach to remuneration across all statutory and other Crown bodies; contain expenditure of public funds within reasonable limits; and provide flexibility within clear criteria. Fees should reflect a discount for the element of public service involved. Most Crown agents and ACEs are classified as Governance Boards under the Framework; these boards generally have annual, rather than daily fees.
The Framework guidance is for fees to be reviewed periodically, which should not necessarily lead to an increase. This review is normally undertaken by the monitoring department, on behalf of the responsible Minister, in discussions with the board chair.
Under the Framework, members should not receive payment as consultants from an entity to which they are appointed. If, however, the responsible Minister agrees that there are overriding reasons for board members to carry out consulting assignments, any proposal to do so needs to be submitted to Cabinet for consideration.
Independent Crown Entities (ICEs)
Setting and reviewing the fees and remuneration for ICE members is the responsibility of the Remuneration Authority, under the Remuneration Authority Act 1977. The particular things to which the Authority must have regard when determining remuneration are contained in s12 of the Remuneration Authority Act.
Generally, the fee paid to an ICE board member is applied to his/her replacement. However, when a new ICE is established or a unique position is being filled (ie, a board chair or deputy, or a full-time role such as Telecommunications Commissioner), the Authority provides the department which is administering the appointment process with an indicative fee range that can be used to discuss the position with interested parties. On appointment, the monitoring department provides the Authority with a copy of the signed notice of appointment, after which the Authority will issue the final fee determination to the appointee and the entity concerned.
The Remuneration Authority reviews fees each financial year. An ICE chair also can make submissions to the Authority for a review of any board fees. The Authority can be contacted at: firstname.lastname@example.org.
Board members who travel to meetings or on other board business that requires them to be away from their normal places of residence are entitled to reimbursement of actual and reasonable travelling, meal and accommodation expenses. Boards should have in place appropriate policies and procedures for submitting and approving board member expenses. This should cover matters such as class of travel, entertainment expenditure and use of credit cards. The Office of the Auditor-General has issued guidance on drawing up suitable policies and procedures, which boards should find useful: Sensitive expenditure — Office of the Auditor-General New Zealand (oag.parliament.nz)
The total value of remuneration paid to each board member is disclosed in the annual report of the entity concerned (s152 CEA).
Taxation matters and their impact on the way the entity pays fees and allowances depend on the personal circumstances of the member concerned. Board members and entity management can clarify the taxation status of members by reference to professional advice or the Inland Revenue.
Board members need to take a personal decision on whether they should take out any kind of insurance protection to cover sickness etc.
Board members are not entitled to any compensation or other payment or benefit relating to loss of office (s43 CEA).
At a minimum a good governance manual should cover, in a way that is relevant to the category of entity:
- the need for a good understanding of the application of the Cabinet Fees Framework
- who sets and reviews board fees and remuneration, and who needs to be consulted
- who in the board engages with the fee setting authority on board fees and remuneration
- when the board becomes the fee setting authority and the mechanism they are required to use
- the general principle that board members do not act as consultants to an entity or board where they are a member of that board
- the need to have in place appropriate policies and procedures for submitting and approving board member expenses.