Cash cushion for Air NZ directors

By FRANCESCA MOLD and LIBBY MIDDLEBROOK

The Government says it would be appalled if fat payouts were made to departing Air New Zealand directors.

But it admits that it might not be able to stop any "golden parachute" payments.

The airline has confirmed that board members who left in the aftermath of the financial crisis, which forced a taxpayer-funded $885 million rescue package, could be entitled to three times their annual directors' fees under the airline's constitution.

Former chairman Sir Selwyn Cushing, who earned $160,000 in directorship fees last year, could be eligible for almost $500,000.

A fellow director, former State Owned Enterprises Minister Philip Burdon, and Brierley chief executive Greg Terry could receive between $135,000 and $270,000 each as a farewell payment.

It will be up to the new board to decide whether the departing directors will be paid retirement benefits.

But Mr Burdon said yesterday that he would not accept a payout because he had served as a director for only just over two years.

"In my opinion, it would be inappropriate for the board to offer me a payment and, for that matter, for me to accept one," he said.

"I wouldn't accept if it was offered."

Former board director Michael Tan, who is the executive vice-president of Singapore Airlines, said: "I am not aware of any special entitlements and I'm not expecting to receive any. It's the last thing on my mind."

Sir Selwyn declined to comment.

The remaining directors of the former board - Mr Terry, Bill Wilson, QC, Jim Farmer, QC, Ralph Norris, Liz Coutts, Sir Ron Carter, Dr CK Cheong, Charles Goode, John Curtis and Professor John Rose - could not be reached for comment.

Finance Minister Michael Cullen said he was appalled at the prospect of large payouts for outgoing directors.

"At a time Air New Zealand clearly faces serious problems and the likelihood of restructuring, these kinds of payments would set a very bad example from the top."

But Dr Cullen said that because the Government would not own shares in the airline until early next year, it had no direct influence over the board and could not stop the payments.

His statement left open the possibility that the Government could act behind the scenes.

Dr Cullen's concern about golden handshakes followed his public castigation of the previous board for its role in the airline's failure.

"I think I am now in a position to say what I have wanted to say for a very long time, which is that Air New Zealand has suffered from factional and factionalised and dysfunctional leadership at the board level for a very considerable period, and certainly it has not been entirely helped by some of its shareholders through that period."

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