SOE board pay set to double after sale

Mighty River will be the first of four state-owned power firms to be part privatised. Photo / Supplied

Directors at state-owned Mighty River Power will get twice their current rates and collect up to $2400 a day when the business is privatised, according to Treasury papers.

Treasury officials said the directors wanted the Government to bump up fees so they were not seen doing it themselves after the sale. Mighty River will be the first of four state-owned power firms to be part privatised.

The cash-incentive proposals are revealed in papers released under the Official Information Act.

Green Party co-leader Russel Norman slammed the move, saying the directors would be doing no extra work and have no extra responsibilities for double the pay.

"This is the reality of what privatisation means. You end up paying those at the top more and those at the bottom pay for it," he said.

Officials warned ministers they were losing quality directors for Crown-owned company boards because the pay was too low.

They told State Owned Enterprises Minister Tony Ryall, who is overseeing the sale, there was a review under way into the fees paid to all directors of companies owned by the taxpayer.

The officials said: "It does seem likely that an increase in base levels for Mighty River Power directors will be recommended pre-listing."

Mr Ryall was told by the Treasury in February the level was likely to be halfway between current levels of $1200 a day and markets rates, which were "up to double this amount".

The Treasury said the board would then have to boost the fees with the approval of investors, with the Government given the casting vote as majority shareholder. It recommended having the Government increase the fees before the initial public offering so directors were "not faced with a 'need' to dramatically increase fees at the first AGM after listing".

Mr Ryall's office did not respond to questions about fee increases.

The fee rise was among Treasury documents recording an ongoing review of directors fees. Officials told Finance Minister Bill English "a reasonable percentage of serving Crown company directors view the current fee levels as unreasonably low".

Joan Withers gets $98,000 on average while acting as chairwoman for Mighty River Power. She would get about $200,000 a year at the new rates - a similar figure to Contact Energy's chairman, Grant King.

Shareholders Association director Alan Best said shareholders would expect directors in the private sector to show an equivalent rise in company performance with an increase in fees.

"We don't see any reason to increase fees as a matter of course."

Labour's state-owned assets spokesman Clayton Cosgrove said consumers would pay for rise with higher power prices. "These costs will have to be recovered somewhere."