Super City chief's salary swells as bonus rolls in

Auckland Council's chief executive Doug McKay. Photo / Richard Robinson

The salary of Auckland Council chief executive Doug McKay has jumped from $675,000 to $768,750 in one year after an incentive bonus was rolled into his fixed pay.

The council's draft annual report shows the former corporate leader made $839,106 in the past financial year, of which $70,356 was for a bonus paid for his work in setting up the Super City in the previous year.

Mr McKay, a former corporate leader and the first chief executive of the Super City, began work in November 2010 on a salary of $675,000 with an incentive bonus of $75,000.

Soon after the end of the 2010-11 financial year, the CEO review subcommittee, chaired by Mayor Len Brown, incorporated the bonus into his fixed pay and gave him a 2.5 per cent pay increase in line with other council staff.

Other members of the review sub-committee were councillors Christine Fletcher, Ann Hartley, Penny Hulse, Richard Northey and Penny Webster.

Mr Brown yesterday said the committee believed the change was appropriate because Mr McKay was the only employee on a bonus package.

Asked if Mr McKay should have some "at risk" component to his pay package as the only officer directly employed by the council, Mr Brown said the package was inherited from the agency that set up the Super City.

"When it's combined, given the size and complexity of managing the merger, [he] is receiving less than the chief executive of a similar-sized private-sector company," Mr Brown said.

Mr McKay described the change as "a conversion of a variable part of my income to a fixed part of my income".

State Services Commissioner Iain Rennie said a main feature of public-sector chief executive pay policy was a performance-related component.

A spokeswoman for Mr Rennie said public sector chief executives should have an "at risk" component of about 15 per cent and for chairs of Crown entities about 10 per cent to 20 per cent.

Mr Rennie is not responsible for the salaries of council chief executives.

Rise and rise

* $675,000 and $75,000 incentive bonus - salary package for Doug McKay when Super City comes into being.
* $750,000 - new salary when base salary and incentive bonus are rolled into one.
* $768,750 - new salary plus 2.5 per cent pay rise.
* $839,106 - new salary/incentive bonus rolled in/2.5 per cent pay rise/bonus for helping set up Super City.