Southern Cross seeks big fee hike
GIANT health insurer Southern Cross Health Society is asking policyholders for permission to lift directors’ pay by about a third.
The not-for-profit society is defending the scale of the proposed rise, saying the directors’ remuneration pool has not been raised since 1997. The society has seven directors, according to its website.
Health insurance policyholders will vote on the proposal at the society’s annual meeting on December 4 in Auckland.
Despite the lengthy period since the last directors’ fee increase, health insurance premiums have risen sharply in recent years, potentially making the board’s request a sensitive issue at the meeting.
In the five years to the end of December, premiums charged by health insurers, of which Southern Cross is by far the largest, rose by between 4.2 per cent and 9.3 per
‘The society’s cap on the total amount of director remuneration was last increased 17 years ago, in 1997.’
Southern Cross Medical Care Society chairman Graeme Hawkins cent a year, according to the Health Funds Association. The number of people with health insurance has continued to fall.
Southern Cross has tried to head off criticism by getting the Shareholders Association to review the plan to lift the directors’ remuneration pool in stages to $476,000 in the 2017 financial year.
In the year to the end of June 2014, directors were paid a total of $359,120.
Graeme Hawkins, chairman of the Southern Cross Medical Care Society, said: ‘‘The society’s cap on the total amount of director remuneration was 17 years ago, in 1997.’’
A resolution to increase remuneration was withdrawn at the 2008 annual meeting because of the global financial crisis, Hawkins said.
Last year, the board signalled the intention to lift directors’ pay and asked for feedback from the society’s more than 800,000 members.
A draft directors’ remuneration policy was published in May and the Shareholders Association was asked to review it
last increased ‘‘as a watch-dog’’ on matters such as director pay for listed companies, Hawkins said.
Association head of research and governance Grant Diggle said the proposed rise was appropriate for a non-profit organisation of its size and complexity.
He criticised the society for allowing directors’ pay to go unchanged for so long, however, and said Southern Cross had moved to rectify that with ongoing reviews.
Hawkins said the move was intended to allow the society to continue to attract directors with the necessary skills and experience needed to run it.
‘‘However, the board also believes that those levels should not exceed the median for comparable commercial organisations, in recognition of the society’s not-forprofit, friendly-society status,’’ he said.