Government axes CEO bonuses

The Government is stripping public service bosses of their performance bonuses, a move it expects will help save the country $4 million.

State Services Minister Chris Hipkins announced the end to performance pay yesterday, a day after Prime Minister Jacinda Ardern announced a year-long freeze on MPs’ salaries.

Until now, public service chief executive remuneration packages have included the potential to receive a discretionary payment of up to 15 per cent for ‘‘exceptional performance’’.

‘‘The decision to remove performance pay, in addition to dialling back pay settings, including the appointment and reappointment of chief executives at lower points in the remuneration range, will put the brakes on the growth rate of chief executive pay,’’ Hipkins said.

The changes were expected to reduce the total potential spending on chief executive remuneration by up to $4m by 2022. ‘‘We want a Public Service with an international reputation for excellence that is motivated by a spirit of service to the community.’’

All chief executives of core public service agencies, whose remuneration is set by the State Services Commissioner, have signed new individual employment agreements.

Hipkins said research showed individualised performance pay was not an effective incentive for higher performance for complex roles. ‘‘The Government also believes that performance pay is counter-productive to achieving the collaborative, team-based approach, and collective leadership that is critical to achieving better outcomes for New Zealanders.’’

The Government first announced its plans to rein in CEO pay packets in February.

Boards of Crown Entities would soon need to obtain the State Services Commissioner’s written consent for pay rises given to chief executives.