Remuneration of Public Service and State sector chief executives as at 30 June 2015

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Public Service (See Table 1)

• Under the State Sector Act 1988, the State Services Commissioner (the Commissioner) is the employer of most Public Service CEs and is responsible for their appointment and performance management, and the setting and reviewing of their terms and conditions of employment.  This excludes those CEs whose remuneration is set by the Remuneration Authority, which includes the CEs of the State Services Commission, the Crown Law Office and the Government Communications Security Bureau.
• The framework for remuneration for Public Service CEs is set with a view to the movements in the rest of the State sector workforce.  This provided for increases of between 1% and 5%, depending on performance and position in range.  Public Service CEs in general only have their remuneration reviewed once during a term of more than three years.
• In 2014/15, the median increase to Target Remuneration for Public Service CEs (excluding those whose remuneration is set by the Remuneration Authority) was 2.0%, and the average was 1.7%.  This is based on movements ranging from 0% to 4% for the 10 CEs who received a remuneration review during the year, which translates to an average increase of 0.7% across all CEs.  This compares to an average increase in remuneration in the 2013/14 year of 2.8%.
  In addition, in 2014/15 CEs received the following portion of their at risk components (based on performance in the 2013/14 year):
  • 17 of the 23 eligible CEs (74%) received their full 10% earn back component, and
  • Only 5 CEs received a portion of the 15% exceptional performance component, ranging from 3% to 5%.  Actual payments ranged from $7,412 to $12,354 as they were pro-rated for the six months from 1 January to 30 June 2014.
• The appropriation for Public Service CE remuneration is capped by the Government and the State Services Commissioner allocates within this.  Appropriation and actual spend are at around the same level as they were in 2008/09.  In 2014/15 the spend was $12.189m, $1.413m below the cap.
• As at 30 June 2015, the base salary of a Public Service CE was, on average, 5.7 times the average pay for staff of the department.  This has remained relatively stable over the last four years. 
• Some CE roles will receive lower remuneration than second tier managers (often in larger departments) because remuneration is based on the size of the job and the individual’s overall level of responsibility. 

Crown entities (see Tables 2-4)

• Crown entity chief executive (CE) remuneration is set by Crown entity boards after consultation with the Commissioner.  District Health Board (DHB) and Tertiary Education Institution (TEI) CE remuneration requires the concurrence of the State Services Commissioner.  CE remuneration for other statutory Crown entities requires consultation with the State Services Commission (SSC) and, in cases of disagreement with SSC, with Ministers.
• The Commissioner provides all board chairs with guidance when considering increases to CE remuneration which is also consistent with remuneration movements in the broader State sector workforce.  This indicates the Commissioner’s expectations for reasonable increases, taking into account individual performance, and a chief executive’s position in a remuneration range.  The guidance indicated increases for CEs meeting expectations of between 2% and 3%.
• Overall actual remuneration movements were in line with the Commissioner’s guidance.  The median percentage increase for all Crown entity CEs in 2014/15 was 2.5%, which was similar to increases in 2013/14, and in line with the combined effect of salary progression and collective agreement settlements during the period.
• CE remuneration is based on job sizing measured by independent consultants.  As is the case every year, some CEs receive additional increases to recognise job size increases.  This was the case for 8 CEs during 2014/15.  When these additional increases are excluded, the median increase overall is reduced to 2.2%.   The increases for the different types of Crown entities are summarised in the table below.

Remuneration Authority Jurisdiction (see Table 5)

• The Remuneration Authority reviews the remuneration of all positions in its jurisdiction every year.  The pay scale established by the Remuneration Authority for the 2014/15 year exhibited increases between 1.9% and 4.0% over the previous year.