News that fees for Mighty River Power (MRP) directors will rise more than 70% once the company is listed has Opposition parties calling foul.
But New Zealand Institute of Directors president-elect Stuart McLauchlan, of Dunedin, said the previous fees were not commensurate with the risk directors took in sitting on such boards.
State Owned Enterprises Minister Tony Ryall announced yesterday that when Mighty River Power was listed on the NZX, annual director fees would increase from $49,000 per year to $85,000 for each director and from $98,000 to $150,000 for chairwoman Joan Withers.
There would also be a general pool of $85,000 for committee work to be distributed by the board.
Mr Ryall said he had been advised the current fees for MRP directors were well below those paid by comparable listed companies.
''We understand directors of similar-sized companies on the NZX currently receive at least twice the current MRP fees, if not more.
''We have made a reasonable but conservative increase to MRP director fees to compensate for the increased responsibility in their new roles and the added risks around being on the board of a publicly listed company,'' Mr Ryall said.
Figures supplied by the Minister showed Contact Energy paid its directors $115,000, Air New Zealand (majority-owned by the Government) paid $82,000, Telecom $130,000 and TrustPower, which was much smaller than MRP, paid its directors $75,000 a year.
Mr McLauchlan said that when fees paid for directors on Australian companies were considered, the fees paid by companies such as Fletcher Building and Contact were not out of the ordinary.
Asked if the fees being offered attracted people or put them off applying for the roles, Mr McLauchlan said there was a pool of experienced directors in New Zealand. It was worthwhile keeping those people on the boards for their experience and to provide guidance for new directors coming in.
The Government would still have a majority say in appointing the directors because it would retain a 51% interest in MRP but there would be an NZX-approved process to be followed for the appointment of all directors, he said.
Labour Party state-owned enterprises spokesman Clayton Cosgrove said the 73% hike in fees showed the asset sales programme was a cash cow that kept on milking the taxpayer.
He claimed nothing much had changed for the directors in their job description, workload or responsibilities. All that was changing was the shareholding. Given there would be a decrease in Parliament's oversight, their job had, arguably, become easier.
''The Government is making a habit of shelling out money to SOE heads. Solid Energy's former chief executive [Don Elder] got a $250,000 golden handshake. This is a golden thumbs up for Mighty River directors, saying thanks for going private,'' Mr Cosgrove said.
MRP directors were now being paid an extra $1200 a day to prepare for the partial sale of the company. Soon, they would get $36,000 more in fees. It was no wonder some SOE directors had been so enthusiastic about asset sales, he said.
Green Party co-leader Russel Norman said the Government's asset sales meant higher pay packets for electricity company directors, paid for through higher power prices for Kiwi families and businesses.
''So much for the promise that privatisation would deliver cost efficiencies and savings. Mighty River isn't even on the market yet and privatisation is already pushing up its costs,'' he said.
