While candidates should undertake due diligence on boards they may have an interest in, they should also be aware of the generic terms and conditions of any proposed appointment. Below are some of the areas candidates need to consider.
Duration of Appointment
For the majority of boards the Treasury provides advice on, directors, including the chair and deputy chair (if there is one), are appointed by the Shareholding or Responsible Ministers for terms of up to three years.
Directors may be reappointed for a second term and, in response to a particular need, a director may be appointed for further periods. Ministers will make their decisions based on an entity’s business needs, the availability of candidates for the role (including the incumbent), the incumbent’s performance, and the make-up of the board.
Before applying for a position as a Crown director, you should be sure that you have the time available to commit fully to such an important role.
Although specific requirements vary from board to board, a good rule of thumb is that you will require a minimum commitment of two to three days per month. One of those days will involve attendance at the board meeting, and there will generally also be a requirement for sub-committee or subsidiary company attendance. Other duties, such as preparing for meetings and reviewing board papers and other material, can generally be accomodated outside of normal working hours, but are nonetheless critical components of the role.
The chair’s commitment is generally twice that of the other directors on the board.
Attendance at meetings is critical. Appointees are expected to make every effort to attend all meetings or, should they be unable to attend a particular meeting, to make arrangements to contribute in other ways.
There are three differing mechanisms used to determine the remuneration of directors:
- For Crown company boards, the Treasury advises the Shareholding Ministers on appropriate remuneration in accordance with the Crown Company Fees Methodology. The amounts paid vary on the size and scale of the company concerned and its associated risk profile. The base rate used to calculate remuneration for directorships ranges from $18,000 to $49,000 per annum. The actual rate will depend on a number of factors, including the size and complexity of the company and the diversity of its operations and markets.
- For the non-company Crown entities the Treasury is responsible for, the Treasury advises the Minister on remuneration in accordance with the Cabinet Fees Framework (State Services Commission website).
- The fee setting body for independent Crown entities is the Remuneration Authority (State Services Commission website).
Chairs, deputy chairs and directors are expected to review their performance annually. These reviews are primarily a tool to help boards analyse their performance, and to identify and remedy any areas where performance could be improved.
The Treasury conducts sector-specific induction programmes for all new directors. The entity then provides new directors with a formal induction into all aspects of the organisation.
Once appointed, all directors are responsible for ensuring that they remain up-to-date in their knowledge of the legal and professional duties of board members. Ongoing professional development is typically agreed between directors and chairs as part of the annual performance review cycle.