CHE CHIEF EXECUTIVE REMUNERATIONState Services
State Services Minister Jenny Shipley and Health Minister Bill English announced today that from 1 July 1997 Crown health enterprise boards would be fully responsible for salary packages paid to their chief executives.
"This change will improve the accountability of chief executives to their boards of directors. Previously accountability was split between the boards, the State Services Commission, the Minister of Health, and the Crown Company Monitoring Advisory Unit.
"CHE boards are responsible for companies that collectively have annual revenue of $2.8 billion and assets of $2.1 billion. It makes sense for them to be able to set competitive salary levels and have full control over their chief executive's performance," the Ministers said.
"New Zealanders want to know that the best managers available are running the health and disability sector. In some instances to date I believe the salary restrictions have hampered boards' abilities to recruit and retrain high quality chief executives. The lack of a clear accountability line has also hampered boards' ability to deal effectively with performance issues."
The Ministers say CHE boards would now be expected to publicly justify the salaries paid to their staff, including chief executives. In accordance with the annual reporting provisions of the Companies Act, the chief executive's remuneration bracket would be identified in the annual report, along with income brackets for all medical and non-medical employees with incomes in excess of $100,000, beginning with their 1996/97 reports. Maximum rates for CHE chief executive salary packages, including a requirement for a performance-based incentive scheme, were set by Cabinet in 1993. CHE boards had to seek the approval of the Minister of Health for chief executive bonus criteria, the approval of CCMAU for the payment of bonuses, and were required to consult with the State Services Commissioner on the terms and conditions of chief executive employment contracts.