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Owner's Expectations Manual

Annex 7: Directors' fees and reimbursement guidelines

1 Introduction

  • This information on shareholder expectations around the payment of directors' fees and expenses in Crown companies has been prepared to provide a reference for the use of chairs, directors and management of Crown companies.
  • The policies and procedures adopted by individual boards are an operational matter for each board to determine. However, the Crown as shareholder has expectations around the basic level of process that its companies will have in place. This material provides guidance on these expectations and, therefore, should be seen as a tool to check current practice against those expectations, rather than a manual of instructions and directions.
  • For matters where delegation or approval rests outside the Crown company board, expectations and guidelines are set out to assist with the approval process (eg, the approval by responsible Ministers in certain circumstances).
  • The format for each section of this guide contains a combination of the following elements:
    • Background: Where the issues surrounding the matters in question are set out and discussed.
    • Guidelines and expectations: Practical notes that will assist boards and provide direction, if necessary.
    • Best practice: Where recommended best practice is summarised.

1.1 Policy and Procedures Manual

  • It is envisaged that these guidelines will be adapted to form part of each company's Policy and Procedures Manual (or the equivalent document). Such a manual is a vital governance and management tool for the effective implementation of best practice in companies. Ministers expect the directors of Crown companies to ensure that there is one in place, that it is extensive, covering not only the internal matters of managing the enterprise but also the activities of the board and directors.
  • Each board's policy manual should clearly set out the core principles applicable to the Crown company and, in addition to the matters covered in these guidelines, should clearly set out the linkage with other important management documents including:
    • Code of Conduct
    • human resource manuals
    • information technology policy
    • employment contracts
    • planning and budgeting
    • legislative compliance
    • accounting manuals
    • security and privacy policy, and
    • financial delegations (including approval of board expenditure).
  • The policy manual should clearly demonstrate the linkage with the risk profile of the company, internal audit and the internal audit programme. Finally, the processes of policy amendment, policy enforcement, training and the reporting of policy non-compliance should be clearly set out.
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