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Performance
and Appointments Committee
14 February
2023
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Amendments to the Appointments and
Remuneration Policy for Board Members of Council Organisations and the Director
Apppointment Process for Ports of Auckland Limited
File No.: CP2023/00151
Te take mō te
pūrongo
Purpose of the report
1. To
make amendments and recommendations to improve the decision-making processes
relating to the Appointments and Remuneration Policy for Board Members of
Council Organisations (the Policy) and Ports of Auckland Limited (POAL) director
appointments.
Whakarāpopototanga matua
Executive summary
2. Elected
members and staff have identified issues with aspects of the Policy. These
issues were discussed with committee members at a meeting on 25 January 2023.
This report includes proposals to address each of the identified issues.
3. The
issues and recommended proposals are:
a) The approval by the
committee of a short-list of candidates is a step which adds significant time
delays to the director recruitment process. Previous workarounds have involved
delegation to a sub-group of committee members. However, this is not explicitly
provided for in the Policy and is not a long-term solution. It is recommended
that the Policy is amended to allow for flexibility in delegating this decision
and increasing the frequency of committee meetings.
b) Core competencies for
substantive CCO directors are listed in the Policy as attributes sought from
all new directors. Committee members have suggested changes to ensure directors
are suitable for the role. To address this, the core competencies will be
updated to require directors to have extensive and relevant experience.
c) On the disestablishment
of Auckland Council Investments Limited the responsibility for appointing POAL
board members was delegated to the Ports of Auckland Limited Appointments Panel
(POALAP). The decisions made by the POALAP do not have the same democratic
accountability and transparency as appointment to the substantive CCO boards
which are made by the Performance and Appointments Committee. The
recommendation is for the Performance and Appointments Committee to take
responsibility for POAL appointments and mirror the appointment process for the
substantive CCOs.
d) The POAL constitution
has a director rotation clause that is unnecessarily complex which can lead to
perverse outcomes. The recommendation is to simplify the term length to a
three-year term as is the case for substantive CCOs.
e) Under the POAL
constitution, directors elect the chair and deputy chair. To improve
shareholder control of the company, the recommendation is for the shareholder
to appoint the chair and deputy chair as is the case for substantive
CCOs.
4. The
proposals in paragraphs 3. c), d) and e) will require Governing Body decisions
as Governing Body is responsible for delegating decision-making responsibility
for POAL and making changes to the POAL constitution. This committee will
therefore make recommendations for the Governing Body to consider. Changes to
the POAL constitution will also require the approval of the Minister of
Transport under the Port Companies Act 1988.
Ngā tūtohunga
Recommendation/s
That the
Performance and Appointments Committee:
a) whakaae
/ approve the following changes to the Appointments and Remuneration Policy for
Board Members of Council Organisations:
i) in
circumstances where an appointment must be made promptly, the committee may
agree to delegate approval of a short-list of candidates to a panel comprised
of the chair and deputy of the Performance and Appointments Committee and chair
of the Independent Māori Statutory Board (or their nominees)
ii) add
a new core competency for prospective directors of substantive council-controlled
organisations requiring them to have “extensive and relevant experience
of industries and customers relevant to the operations of the
council-controlled organisation”
b) whakaae
/ agree to recommend to the Governing Body that the frequency of Performance
and Appointments committee meetings is increased to monthly
c) whakaae
/ agree recommend to the Governing Body that it delegates responsibility for
appointments to the Ports of Auckland board to the Performance and Appointments
committee and revoke the delegation to the Ports of Auckland Appointments Panel
d) whakaae
/ agree subject to the Governing Body delegating responsibility for Ports of
Auckland Limited Board appointments to the Performance and Appointments
Committee, amend the Appointments and Remuneration Policy for Board Members of
Council Organisations so that the Ports of Auckland Limited section mirrors the
section for substantive CCOs
e) whakaae
/ agree to recommend to the Governing Body that the necessary steps are taken
to amend the Ports of Auckland Limited constitution so that:
i) the
term length for board members is up to three years. On expiry of the three-year
term a director will be eligible for reappointment. No director will be
appointed for more than three consecutive terms of three years
ii) the
shareholder appoints the chair and deputy chair of the board.
Horopaki
Context
5. The
Local Government Act 2002 requires that council adopt a policy that sets out an
objective and transparent process for making appointments of directors of
council organisations (s 57). The Policy is the council’s policy for the
purposes of s 57 of the Local Government Act 2002.
6. The
Performance and Appointments Committee has the delegated responsibility to make
amendments to the Policy.
7. The
Policy was last reviewed in 2017. Amendments were made in 2018 to include a
process for making appointments to POAL [GB/2018/91] and in 2020 to update the
core competencies of substantive CCO directors [APR/2020/10]. A full review of
the Policy will take place in the second half of this year.
8. Staff
have identified some aspects of the Policy that would benefit from immediate
attention before a full review is conducted. This report includes proposals to
address the identified issues with the Policy.
9. In
addition, there are identified issues with the delegated responsibility to the
POALAP and processes relating to POAL board appointments.
10. After
Auckland Council Investments Limited was disestablished in 2018 the oversight
and responsibility for managing the ownership of POAL shifted to the council.
The responsibility for board appointments was delegated by the Governing Body
to the POALAP. The members of the POALAP are the Mayor, the chair of the POAL
board and the chief executive of Auckland Council. The Policy was also amended
to include a bespoke process for appointing directors to the POAL board.
Tātaritanga me ngā
tohutohu
Analysis and advice
Approval of the short-list
11. The
requirement in the Policy to seek committee approval of a short-list of
candidates prior to interview adds time to the process in preparing advice and
awaiting the next committee meeting. The committee is currently scheduled to
meet quarterly which could mean that approval to interview the short-listed
candidates is delayed by more than a month.
12. To deal with
the delays this committee delegated the approval of the short-list to a panel
consisting of the Mayor, chair and deputy chair of the committee and the
Independent Māori Statutory Board chair for the appointment processes
initiated in December 2022 [PACCC/2022/3]. This solution is not provided for in
the Policy and is not a long-term solution.
13. The key
benefit of the committee being required to approve the short-list is that it
provides an opportunity for the committee to maintain oversight and provide input
at the mid-point of the director recruitment process.
14. Options
considered for amending the Policy are explained below:
i. Status quo
Description
No change to the current policy.
Discussion
The status quo provides for full
consideration of the short-list by the committee.
This does not shorten the time taken to
complete an appointment.
ii. The
short-list is approved by a panel
Description
The short-list is approved by a panel
consisting of the chair and deputy of the committee and IMSB chair or, if any
of these are on the selection panel an alternate member of the committee may be
nominated in their place.
The committee is informed of the
short-list recommendations by a memorandum.
This option is similar to the delegation
put in place for the current recruitment of appointments of Auckland Transport
and Tātaki Auckland Unlimited directors.
Discussion
This option allows for quicker decision
making as approval is not dependent on a committee meeting.
The committee has a reduced role in
overseeing the candidate selection process but remain informed.
iii. Flexible policy
Description
The Policy is amended to note that the
committee may delegate approval of the short-list to a panel as described in
option ii above where extraordinary circumstances mean that an appointment must
be made as soon as possible.
Recommend to the Governing Body that the
committee is scheduled monthly.
Discussion
This option provides flexibility for the committee to
retain or delegate its role in approval of the short-list as
appropriate to the circumstances. The current level of oversight is maintained
in most circumstances.
Monthly meeting frequency will reduce delays caused by
seeking committee approval.
This option is recommended because it maintains a high
level of engagement with the committee but provides a clear mechanism to move
more quickly when required.
Core competencies
15. The Policy
includes core competencies for directors of substantive CCOs. These
competencies were updated by the Appointments and Performance Review Committee
in August 2020 [APR/2020/10] and are as follows:
a) uphold the principles
of the Treaty of Waitangi, readiness to promote improved outcomes for
Māori and knowledge of Te Ao Māori and established Māori
networks
b) demonstrate appropriate
accountability and responsiveness to the Governing Body and the public and a
commitment to public sector ethos
c) demonstrate financial
accountability with close review of current and proposed activities to deliver
value for money
d) commitment to integrate
council’s climate action plans into the strategies and operations of the
council-controlled organisations
e) driving appropriate
leadership and cultural response to deliver the required outcomes (and/or
deliver on targets as identified)
f) commitment to
collaborate across the council-controlled organisation family
g) demonstrate inclusive
and adaptive leadership to harness the benefits of diversity.
16. Members of
the committee have suggested that all candidates should have extensive
experience in an industry that is relevant to the CCO and that candidates must
have the time and capacity to give the CCO board the appropriate level of
attention.
17. An additional
competency is recommended as follows:
Extensive and relevant experience of industries and
customers relevant to the operations of the council-controlled organisation.
18. The ability
of a candidate to fulfil their role as a board member is the key consideration
for the selection panel and this includes their ability to balance their
commitments and give the necessary time and attention to the board. Staff
consider that a separate competency that addresses this requirement is not
needed.
19. The
recommended amendments to the Policy regarding the approval of short-lists and
core-competencies will apply to appointments to substantive CCOs boards and
POAL.
Ports of Auckland Limited
Decision-making Responsibility
for Director Appointments
20. Decision-making
responsibility for appointing directors to the POAL board currently sits with
the POALAP. The POALAP comprises:
· The
Mayor (acting as chair of the POALAP)
· Chief
executive of Auckland Council
· Chair
of the POAL board
21. The board
appointments made by the POALAP do not have the same democratic accountability
and transparency as appointments to substantive CCO boards made by the
Performance and Appointments Committee.
22. Staff
recommend that the Performance and Appointments Committee take over
responsibility for appointments to the POAL board. Shifting responsibility will
mean that the appointment decisions are transparent and are made by a committee
specifically set up to consider director appointments.
23. The POAL
section of the Policy assigns responsibility for recruitment, short-listing and
interviewing candidates to the POAL board. This section should also be amended
to mirror the appointment process for the substantive CCOs.
24. The Governing
Body is responsible for delegating decision-making responsibility for POAL. The
amendment to the POAL section of the Policy will only come into effect after
the Governing Body has made the decision to delegate responsibility to the
Performance and Appointments Committee. The process for these changes is set
out below:
The Performance and Appointments Committee will:
a) amend the POAL section
of the Policy to mirror the appointment process for the substantive CCOs
(subject to the Governing Body delegating responsibility for POAL).
b) recommend that
Governing Body revoke the delegation to the POALAP and delegate responsibility
for appointments to the POAL board to the Performance and Appointments
Committee.
The Governing Body will:
a) amend the Terms of
Reference for the council committees, to revoke the delegation to POALAP and
delegate responsibility to the Performance and Appointments Committee for
appointments to the POAL board.
25. The
Memorandum of Understanding between POAL and the council (MOU) notes that the
council is required by the Local Government Act 2002 to have a policy for board
appointments to council organisations. The Policy is annexed to the MOU. The
MOU should be updated with the amended Policy and a copy provided to the POAL
board.
POAL Constitution Changes
26. Staff also
recommend that the POAL constitution be amended to change the director rotation
policy and the clause that sets out who is responsible for electing the
chairperson and deputy chairperson of the POAL board.
Director Rotation Policy
27. The POAL
constitution includes a director rotation clause which requires one third of
the longest serving directors (since their last appointment) to retire each
year. The retiring directors are eligible to be reappointed. In practice this
rotation clause is unnecessarily complicated and can lead to newly appointed
directors having to retire if a longer serving director was reappointed just
before the new director was appointed.
28. The
constitution should be amended to simplify the term length by including a
three-year term as is the case with the CCOs. On expiry of the three-year term
a director will be eligible for reappointment. No director will be appointed
for more than three consecutive terms of three years.
29. The POAL
board and the POALAP have previously requested this change. It is appropriate
to the make this change now while other changes are made to director
appointments.
Appointment of the chair
and deputy chair
30. Under clause
33.9 of the POAL constitution the directors may elect the chairperson and
deputy chairperson of their meetings and determine the period for which they
respectively are to hold office. Whereas under the constitution of the CCOs it
is the council who appoints the chairperson and deputy chairperson of the
board.
31. Staff
recommend that the POAL constitution be amended so the council appoints the
chairperson and deputy chairperson to improve shareholder control of the
company.
Changes to the POAL
constitution needs Governing Body decision
32. The Governing
Body has decision-making responsibility for making changes to the POAL
constitution and under the Port Companies Act 1988, any change to the POAL
constitution requires the approval of the Minister of Transport. Therefore,
this committee will recommend the above changes to the POAL constitution to the
Governing Body. A report will be presented to the Governing Body with the
recommendations from this committee.
33. The
amendments proposed in this report are not in conflict with the Port Companies
Act 1988.
Tauākī whakaaweawe
āhuarangi
Climate impact statement
34. This decision
is unlikely to result in any identifiable changes to greenhouse gas emissions.
The effects of climate change will not impact the decision’s
implementation.
35. The core
competencies for directors of substantive CCOs include that directors are
committed to implementing the council’s climate plans and strategies such
as Te Tāruke-ā-Tāwhiri into the operations of the CCO.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
36. The board of
Ports of Auckland has been consulted via the chair and are not opposed to the
proposed changes to the appointments process for POAL.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
37. Board appointments are the role of the Governing Body except where
decision making has been delegated to a Local Board. Local boards can
participate in the nomination process for each director vacancies.
Tauākī whakaaweawe
Māori
Māori impact statement
38. Kia ora Tāmaki Makaurau sets as a mahi objective that:
"Mana whenua and Māori are active partners and participants at all
levels of the council group's decision making".
39. The recommendations in this report mean that the IMSB would have a
greater role in making appointments to the board of POAL as members of this
committee and as members of the selection panel.
40. Amendments to the appointments process and core competencies
maintain the representation of the IMSB as part of decision making.
Ngā ritenga
ā-pūtea
Financial implications
41. There are no
material financial implications from the recommendations of this report.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
42. There are no
identified risks associated with the recommended amendments to the Policy
regarding core competencies or approval of short-lists.
43. The recommendations
regarding POAL appointments require amendments to the Terms of Reference and
will not be implemented unless the Governing Body approves these changes.
44. Recommendations
regarding the POAL constitution are subject to approval by the Governing Body
and the Minister of Transport. If either of these approvals are not granted,
these changes will not be implemented.
Ngā koringa ā-muri
Next steps
45. The Policy
will be amended to reflect the decisions made by the committee.
46. The MOU between
the council and POAL will be updated with the amended Policy and a copy
provided to the POAL board.
47. A report will
be taken to the Governing Body asking to consider the recommendations made in
this report.
48. Subject to
the decision of the Governing Body, approval will be sought from the Minister
of Transport to amend the POAL constitution.
49. Staff will
review the Policy as a whole and make recommendations for any further
amendments in the second half of this year.
Ngā tāpirihanga
Attachments
There are no attachments for
this report.
Ngā kaihaina
Signatories
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Authors
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James Stephens - Senior Advisor
Chris Levet - Principal Advisor
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Authorisers
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Alastair Cameron – Manager, CCO Governance &
External Partnerships
Phil Wilson - Director, Governance & CCO
Partnerships
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Performance
and Appointments Committee
14 February
2023
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Process for making appointments to the Tāmaki
Redevelopment Company and Haumaru Housing
File No.: CP2022/16386
Te take mō te
pūrongo
Purpose of the report
1. To
provide transparency about the process to appoint directors to the board of the
Tāmaki Redevelopment Company (TRC) and Haumaru Housing.
Whakarāpopototanga matua
Executive summary
2. Confidential
reports on this agenda seek decisions to appoint directors to the board of TRC
and to make decisions regarding the board of Haumaru Housing.
3. Appointments
to TRC are made jointly with the Crown and are subject to approval by the Crown
shareholders (Minister of Housing and Minister of Finance).
Ngā tūtohunga
Recommendation/s
That the Performance and
Appointments Committee:
a) tuhi ā-taipitopito / note the information about
appointments to the boards of Tāmaki Redevelopment Company and Haumaru
Housing
b) tuhi ā-taipitopito / note that two reports in the
confidential section of the agenda seek decisions regarding the appointment of
directors of council-controlled organisations
c) tuhi ā-taipitopito /note that these reports are
confidential due to the personal information they contain.
Horopaki
Context
Tāmaki Redevelopment Company
4. The
Tāmaki Redevelopment Company (TRC) is a Crown Entity established in 2012
to transform Tāmaki (Glen Innes, Point England and Panmure), focusing on
the renewal of housing resources, social transformation, economic development
and placemaking.
5. The
council has a 41% shareholding in TRC and the Crown (Ministry of Housing and
Urban Development) holds 59%. Council does not fund the activities of TRC.
Haumaru Housing
6. Haumaru
Housing is a limited partnership between Auckland Council and the Selwyn
Foundation which was established in 2016 to provide housing for older people
within 62 village locations across Auckland.
Tātaritanga me ngā
tohutohu
Analysis and advice
Tāmaki Redevelopment Company
7. The
TRC board is comprised of a minimum of five directors and a maximum of nine.
One director is appointed by the Crown, and one is appointed by council. The
remaining directors, including the chair, are jointly appointed by the Crown
shareholders and council.
8. The
appointments recommended on the confidential agenda item are joint
appointments.
9. The
Appointments and Performance Review Committee approved a brief for the
recruitment of two positions in May 2022 [APR/2022/32] and a shortlist of
candidates was approved for interview in August 2022 [APR/2022/45].
10. Council was
represented on the selection panel by Councillor Josephine Bartley and
Independent Māori Statutory Board Member Tony Kake.
Haumaru Housing
11. Council
appoints two of the five Haumaru Housing board members with the remainder
appointed by the Selwyn Foundation. The current terms of council’s two
appointees end on 30 March 2023 and decisions are sought regarding
reappointment or recruitment for these positions.
Tauākī whakaaweawe āhuarangi
Climate impact statement
12. As a crown
entity, council cannot require directors of TRC to commit to specific actions
set by Council policies including Te Tāruke-ā-Tāwhiri, however
an understanding of the impacts of climate change and commitment to integrate
climate action into the activities of TRC was included in the brief as one of
the criteria to assess candidates.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
13. The
appointment of the best possible directors to governance positions has a
positive impact on the group.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
14. Appointments
of directors is the role of the Governing Body. Local Boards may participate in
the nomination process for each director vacancy.
Tauākī whakaaweawe
Māori
Māori impact statement
15. Kia ora
Tāmaki Makaurau sets a mahi objective that: “Mana whenua and
Māori are active partners and participants at all levels of the council
group’s decision making”. This objective is considered as part of
the decision making in the confidential part of the agenda.
Ngā ritenga
ā-pūtea
Financial implications
16. Costs
associated with board appointments are met from existing budgets.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
17. There are
risks common to all board appointments including:
· The
reputational risk of appointing candidates without appropriate skills or
governance expertise. To mitigate this risk, a due diligence process is in
place
· The
governance risk of creating an unbalanced board without an appropriate
diversity of thought and experience amongst its members. This risk is mitigated
by consideration of the range of skills and experiences represented on a board
when setting the brief and staggering appointments to balance the retention of
institutional knowledge with the introduction of new ideas.
Ngā koringa ā-muri
Next steps
18. Next steps
are detailed in the confidential item.
Ngā tāpirihanga
Attachments
There are no attachments for
this report.
Ngā kaihaina
Signatories
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Author
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James Stephens - Senior Advisor
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Authorisers
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Alastair Cameron – Manager, CCO Governance &
External Partnerships
Phil Wilson - Director, Governance & CCO Partnerships
|
