Report to FUTURE TAIRAWHITI Committee for decision

Transcription

1 Title: Section: Prepared by: Adoption of a Revised Policy for Board Appointments and Remuneration Strategic Planning Carrie White (Senior Policy Advisor) and Hannah Steans (Policy Planner) Meeting Date: 27 September 2018 Legal Financial Significance = Medium Report to FUTURE TAIRAWHITI Committee for decision SUMMARY The purpose of this report is for Council to adopt a revised Board Appointment and Remuneration Policy. The policy has been revised so that the process for appointing board members to Council organisations is clearer. New content has been added so that the policy is consistent with other Council policy, Community Outcomes, and best practice for board appointment and remuneration. Criteria aimed at increasing diversity and inclusion in the boards of Council organisations have been added to the policy as a way for Council to help cultivate a diverse pool of experienced directors in Tairāwhiti. There is likely to be community interest in this revised policy because our community generally place a very high value on Council processes being transparent. The decisions or matters in this report are considered to be of Medium significance in accordance with the Council s Significance and Engagement Policy. RECOMMENDATIONS That the Future Tairawhiti Committee: 1. Notes the contents of this report. 2. Recommends that Council: a. Adopts the Board Appointment and Remuneration Policy (2018). Authorised by: Keita Kohere Director Transformation & Relationships Keywords: Board Appointment and Remuneration Policy, diversity, Council organisations, Tairāwhiti Piritahi, fostering Māori participation A Page 1 of 6

2 BACKGROUND 1. The Local Government Act 2002 (S57) (LGA) requires Council to adopt a policy that sets out a process for appointing and remunerating board members to Council organisations. 2. This is the fourth revision of the policy. The current version (2011) is largely unchanged from the version adopted in 2007 which varied from the original 1993 version only in that it added a clause on remuneration and shuffled the responsibilities for the appointment process for example short listing. Who the policy applies to 3. Council has an interest in five Council Organisations (COs) and is the 100% shareholder of one Council Controlled Trading Organisation (CCTO). A list of Council organisations is an appendix to the revised policy (Appendix 1). 4. Council s involvement in each Council organisation is specified in the organisation s founding document (such as an Act of Parliament, rules, Deed of Trust or Constitution). When do we use the policy? 5. This policy is used annually by the Chief Executive and Council to guide the annual rotation of board members during each organisation s Annual General Meeting (AGM). 6. The AGMs of Eastland Community Trust (ECT) and Gisborne Holdings Limited (GHL) are held during a Special Meeting of Council, with the public excluded. This is in accordance with the provisions of the Local Government Official Information and Meetings Act. DISCUSSION Why does the policy need to be revised? 7. As described at 2, the current version (2011) is mostly unchanged from the original which was adopted 25 years ago. 8. This is not unusual amongst councils, with the majority updating their director appointment and remuneration policies for the first time in the last year. Amongst those recently adopted there is a standard of detail far greater that our current policy (2011), and a number have included a clause to ensure remuneration reflects an element of public service. These are moves that better reflect community expectations, and is consistent with the purpose of the LGA. 9. The revision is an opportunity to deliver on community outcomes as well as to implement the objectives of Tairāwhiti Piritahi: Fostering Māori Participation in Council Decisionmaking. Māori make up 49 percent of our district s population (the highest proportion in New Zealand) and have a key role to play in the future planning and decision making for the region. It is also an opportunity to implement best practice suggested in the 2015 Office of the Auditor General s publication Governance and accountability of councilcontrolled organisations. 10. Setting the Policy intent to seed a larger, more diverse pool of experienced board members will benefit the more than 400 trusts and incorporated societies in Tairāwhiti as these people will take the experience gained from being on the board of a council organisation into the wider community. 11. Being specific about the need for women to be actively recruited to boards of Council organisations is consistent with recently announced Government policy directing that membership of all state sector boards is evenly represented by women and men by A Page 2 of 6

3 12. There is a lot of variation in the level of detail contained in the foundation documents of our six Council organisations. Making the hierarchy of documents clear was considered important for the decision making process, particularly around board appointments and tenure. The revisions have changed the 2011 policy in three significant ways 13. This revision (2018) retains much of the 2011 version. New content has been added so that it is now consistent with Council policy and Community Outcomes (see Planning and Policy Implications) and to bring the policy up to date with national and international best practice for board appointment and remuneration. 14. The three significant ways that the revisions have changed the 2011 policy are: Makes the process for appointing board members to Council organisations clearer This includes: A full list of the Council organisations that the policy applies to (under the heading of purpose). New policy objectives. Rules for the appointment of elected members and Council staff to boards, including when a board member stands for political office. Expanded list of competencies including those specific to the board chair. Expectations of the role of the board chair and deputy chair. Terms of appointment (tenure, expiry of tenure and process for managing reappointments). Annual process to review board member performance. Strategic review of future skill requirements as part of recruiting process. Candidate search guidelines expanded to include the Companies Office register of directors, crown agencies such as Ministry of Women Te Minitatanga mō ngā Wāhine, and Te Puni Kōkiri. Explicit direction about the process to interview, assess and decide on board appointments. Guidance on the management of interests and conflicts. New succession planning requirements. Guidance on removing board members (the circumstances where this might be necessary and the process for doing so). A Page 3 of 6

4 Added criteria aimed at increasing diversity and inclusion in the boards of Council organisations This includes: New policy objectives that seek to achieve a larger, more diverse pool of experienced board members serving on boards across the whole Tairāwhiti- Gisborne district. A new statement on the benefit to our community from having diversity of gender, thought, experience and skills represented on the boards of our Council organisations. Reference to Council s policy Tairāwhiti Piritahi: Fostering Māori participation in Council decision-making. Makes the remuneration process clearer This includes: Describing the contribution expected from board members as part of their paid role. A new statement describing the expectation that board members fees should reflect the element of public service in serving on the board of a Council organisation and accordingly be set at or below the average for comparable private sector entities. A statement about the Council approval process required by the ECT Trust Deed before changes to ECT trustee remuneration can be made. Guidance about when and how reviews of board member remuneration should happen. The system for calculating ordinary fees. A rule that no board member can work as a consultant for the organisation unless approved by Council. 15. Appendix 1 is the revised (2018) policy. It shows in red the words taken from the current (2011) version of the policy. All other text (in black) is new to the 2018 version. 16. Appendix 2 is a detailed description of the changes made to the 2011 policy as part of this (2018) revision including the reasons for new content. Key areas where the revised policy differs from foundation documents 17. The revised policy is largely consistent with the foundation documents of each of the six Council Organisations. There are three areas where the policy expands on and introduces content. These are: Tenure. The policy seeks regular turnover of board members so that it can achieve its objectives. It makes clear the expectation that board members serve a maximum tenure of six years (two terms). The foundation documents of ECT and GHL are the only Council organisations that reference tenure. These state that one third of directors must retire each year. Remuneration. The policy states that board member fees will reflect an element of public service and will accordingly be set at or below the average for comparable private sector entities. The Tairāwhiti Museum Trust Board is the only Council organisation that references this expectation. A Page 4 of 6

5 Diversity. The policy is explicit about the need to increase diversity in board membership. Again, the Tairāwhiti Museum Trust Board is the only Council organisation that references this in their foundation document. ASSESSMENT of SIGNIFICANCE Criteria This Report The Process Overall The effects on all or a large part of the Gisborne district Medium Medium The effects on individuals or specific communities Medium Medium The level or history of public interest in the matter or issue Medium Medium Inconsistency with Council s current strategy and policy Low Low Impacts on Council s delivery of its Financial Strategy and Long Term Plan. Low Low 18. The decisions or matters in this report are considered to be of medium significance in accordance with Council s Significance and Engagement Policy. 19. The medium significance ranking for the process overall signals that there is likely to be a level of public interest in the revised Policy. This is because the revisions have given the policy a wider reach than only Council organisations, and because our community generally place a very high value on Council processes being transparent. COMMUNITY ENGAGEMENT 20. We will work with Council organisations to achieve the objectives of this policy. CONSIDERATIONS Financial/Budget 21. The revised policy will have long-term cost benefits through good decision making, greater local connections and increased efficiency. Legal 22. Council has a legal obligation through founding documents like trust deeds, rules, and constitutions to contribute to the composition of boards across the district. These include but are not limited to the Eastland Community Trust, Gisborne Holdings Limited, Eastwoodhill Trust and the Tairāwhiti Museum Trust Board. 23. The revised policy is compliant with the Local Government Act 2002 (S57) which requires Council to adopt a policy that sets out a process for appointing and remunerating board members to council organisations. POLICY and PLANNING IMPLICATIONS 24. The decision to adopt a revised policy that guides the appointment and remuneration of members to Council organisation boards is consistent with Council s policies and plans. In particular the revised policy contributes to the community outcomes of Tairāwhiti Tangata (our people) and Tairāwhiti Wawata (our aspirations realised). Both outcomes relate to our role in fostering active participation of our community in community life to achieve the goal of being a district that leads and advocates for itself. 25. The introduction of diversity and inclusion elements to the revised policy is consistent with our policy Tairāwhiti Piritahi: Fostering Māori participation in Council decision-making, which was adopted by Council in June 2018 as part of the Long Term Plan. A Page 5 of 6

6 26. The introduction of a statement on board diversity, new core competencies and a restriction on the payment of retiring or other gratuities, means that Council and ECT policy for board appointments is consistent. Good alignment, particularly where it is best practice, is consistent with ECT s 2019 key performance indicator to foster a good relationship with Council. RISKS 27. There are no major risks associated with the decision to adopt a revised policy for board appointments and remuneration or with the strategy of fostering a greater, more diverse pool of people in our community who are able to serve on our Council organisation boards. 28. It has been seven years since this policy was last reviewed and, while the Local Government Act doesn t specify a timeframe for review of this policy, it is considered good governance and risk management practice to regularly evaluate the effectiveness of policies and revise them as necessary. APPENDICES Appendix 1: Revised Board Appointments and Remuneration Policy (2018) Appendix 2: List of Changes to Director Appointments and Remuneration Policy (2011) A Page 6 of 6