While candidates should undertake due diligence on boards they may have an interest in, they should also be aware of the generic terms and conditions of any proposed appointment. Below are some of the areas candidates need to consider.
Duration of Appointment
For the majority of boards the Treasury administers, directors, including the chair and deputy chair (if there is one), are appointed by the Shareholding or Responsible Ministers for terms of up to three years. Shorter terms may be set to align with term expiries or for board transition.
Directors may be reappointed for a second term and, in response to a particular need, a director may be appointed for further periods. Ministers will make their decisions based on an entity’s business needs, the availability of candidates for the role (including the incumbent), the incumbent’s performance, and the collective skills and experience of the board.
Before applying for a position as a Crown director, you should be sure that you have the time available to commit fully to the role.
Although specific requirements vary from board to board, a good rule of thumb is that you will require a minimum commitment of two to three days per month. One of those days will involve attendance at the board meeting, and there will generally also be a requirement for sub-committee or subsidiary company attendance, preparation for meetings and reviewing board papers and other material, and site visits. The chair’s commitment is generally twice that of the other directors on the board.
Attendance at meetings is critical. Appointees are expected to make every effort to attend all meetings or, should they be unable to attend a particular meeting, to make arrangements to organise remote access or contribute in other ways.
There are three differing mechanisms used to determine the fees of directors:
- For Crown company boards, the Treasury advises the Shareholding Ministers on appropriate fees in accordance with the Crown Company Fees Methodology. The Shareholding Ministers annually approve a fees pool for each board. Each board determines how to allocate this pool of fees. The base rate used to calculate the fee pool for directorships ranges from $18,000 to $54,500 per annum per director. The actual rate will depend on a number of factors, including the size and complexity of the company and the diversity of its operations and markets, and associated risk profile. Chairs are remunerated at twice the base rate and deputy chairs at 1.25 the base rate. Special fees may be approved in advance by Shareholding Ministers for extraordinary board work undertaken for Crown company boards.
- For the non-company Crown entities the Treasury administers, the Treasury advises the Minister on remuneration in accordance with the Cabinet Fees Framework (State Services Commission website).
- The fee setting body for independent Crown entities is the Remuneration Authority (State Services Commission website).
Boards and individual directors are expected to review their performance annually. These reviews are primarily a tool to help boards analyse their performance, and to identify and remedy any areas where performance could be improved.
The Treasury conducts bi-annual induction programmes for all new Crown directors. The entity provides new directors with a formal induction into all aspects of the organisation.
Once appointed, all directors are responsible for ensuring that they remain up-to-date in their knowledge of the legal and professional duties of board members. Ongoing professional development is encouraged and typically agreed between directors and chairs. For Crown companies a budget to support this is annually approved by the Shareholding or Responsible Minister.