CEO payrise irks public watchdog
The public service watchdog has delivered a warning to the board of Guardians of the Super Fund: It does not operate outside of public accountability.
In an extraordinary statement, State Services Commissioner Peter Hughes has admonished the decision of the Super Fund to disregard advice over an appropriate pay rise for its chief executive Adrian Orr.
The Super Fund released its justification for bumping his base salary up another 2.7 per cent in its annual report – pre-empting the typical release in the annual disclosure of chief executive remuneration.
The 2016-17 pay rise for Orr comes on top of the whopping 35.6 per cent pay rise he received the year prior, and is more than the 1 per cent Hughes recommended was more appropriate for a public sector chief executive.
Along with additional performance bonuses totalling a 14.7 per cent increase to his pay, Orr earned more than $1.2 million – up from $1.06m the year before. He manages a $35 billion investment fund, which increased by $5.2b in the 2016-17 year.
The Guardians do not believe their chief executive should be bound by public sector pay scales, while the SSC has warned Orr is paid by the taxpayer and that needs to be balanced against the size of his job.
Hughes’ document release includes officials’ emails setting out expectations that Orr should not be paid more than $1.1m in the year beginning July 1, 2016.
It came with the advice the Guardians ‘‘may wish to consult with your minister if you decide not to accept this advice’’.
Documents show they did consult Finance Minister Steven Joyce and the SSC also delivered a briefing to Joyce and State Services Minister Paula Bennett in May this year.
On August 9, Joyce and the SSC were delivered a letter from the Guardians board informing them of their final decision: Orr would receive a 2.7 per cent pay rise.
In their annual report, the Guardians said it was justified because ‘‘the public sector pay scale recommended by the State Services Commission is not, in the board’s view, appropriate for setting the CEO’s remuneration’’.
In response, Hughes yesterday released his own documentation.
‘‘I do not accept the argument that Crown entities such as Guardians of New Zealand Superannuation should be able to make decisions free of any public sector oversight or accountability,’’ Hughes said.
‘‘This is a public agency investing public money for the good of the public. And the chief executive’s remuneration is paid by taxpayers. Crown entities have a strong element of public service attached to their work and executives should reasonably expect to earn less than in a private sector company.’’
Hughes said that from this year, where board decisions on chief executive remuneration were not consistent with his advice, he would be ensuring that was recorded transparently in the annual disclosure of the chief executive’s pay.