Finance Minister Bill English has been warned there may be some curly questions over the level of staff bonuses at the Guardians of New Zealand Superannuation after its best investment year ever.
Senior managers and executives received $1.39 million from their incentive scheme in the 12 months ended June 30, up by more than a $1 million from the year before as staff enjoyed the rewards from the best annual return by the New Zealand SuperannuationFund.
The biggest beneficiary, presumably chief executive Adrian Orr, had his base salary band of $470,000 to $480,000 rise to between $710,000 and $720,000 with the bonus.
That increase prompted chairman David May to write to Mr English on September 29 to explain the incentive scheme and warn "we expect this to gain media attention".
"What has caused the large increase is an exceptional one-off payment caused by the improvement in the long-term performance of the fund," Mr May said in a letter released to BusinessDesk.
"It is achieving what was intended - to reward investment performance over four years rather than one."
The scheme is based on a four-year performance period and is only realised if the average return exceeds its target over the time. It also allows for "catch up" payments if poor years are followed by exceptionally good years.
Mr May said the "catch up" component bolstered this year's bonus after the 2008 and 2009 financial years didn't meet the targets, though the latest year, when the Super Fund made a 25 percent return after fees, compensated for those weak years and amounted to 36 percent of salary for all staff.
Since the reporting period, the fund reported monthly declines of 2.8 percent and 5 percent in July and August as financial markets sank. As at August 31, the fund was worth $17.36 billion.
The fund was set up to help pre-fund pensions of an ageing population, and won't start making payments until 2030.
NZN