NSW Audit Office - Financial Reports – 2003 - Volume 3 – Compliance Review of Chief Executive Officer

Compliance Review of Chief Executive Officer (CEO) Contracts CEO contracts for agencies scheduled under the Public Sector Employment and Management Act 2002 must comply with Premier’s Department guidelines. Other public sector agencies and State Owned Corporations (SOCs) may follow these guidelines to achieve good practice. Treasury is currently preparing guidelines for CEO contracts and remuneration for Government businesses. Unless Ministers observe the guidelines, the risk is that unfair and unethical practices may evolve in the employment of executives. There is also no assurance that CEOs are providing value in return for their remuneration. The guidelines provide a consistent framework and cover such matters as recruitment and selection, ethical and contractual responsibilities, employment entitlements, remuneration and removal and performance. Our August 2000 report to Parliament assessed the contracts of 146 Chief Executive Officers (CEOs) from all types of public sector agencies. The results of our review were most unsatisfactory, as Ministers and departments were not complying with many of the requirements of the guidelines. The Government acted swiftly to address our recommendations. Three years later, we decided to again review the contracts and processes that assess and reward CEOs. KEY FINDINGS We found issues of concern in nine of the 16 agencies we reviewed, mainly in the lack of performance agreements and appraisals and in ...