Parininihi Ki Waitotara Incorporation (the Incorporation or PKW) was constituted under Te Ture Whenua 1993. The Incorporation was established by Order in Council in 1976 to administer the lands previously known as the West Coast Settlement Reserves. Their office is located in Stratford, Central Taranaki. The Incorporation has 7971 owners. The core business of the Incorporation is the administration of the unimproved value contained in 350 leases and incorporates 22,000 hectares of farmland. Following the Reserved Land Amendment Act 1997 the Incorporation purchased back lessees’ improvements of some 33 leases. With amalgamation the Incorporation now has 18 dairy farms. It now produces some 1.56 million kilograms of milksolids.
In 1997, the PKW Board with consultants produced a land management plan, which was taken around the motu and eventually passed by a large majority of shareholders. The land management plan outlined desirable leases to be purchased and contiguous blocks of freehold but also provided for sales of uneconomic or unsuitable blocks of land.
In order to diversify its investments, which are mainly land, the Incorporation has diversified and now has the following investments portfolio:
The asset base of the Incorporation at current market value is approximately $200 million. The farming operations of the Incorporation are carried out by a subsidiary company, PKW Farms Ltd. This company is wholly owned by the Incorporation. The company has five directors; three are members of the PKW Board with the other two being independent directors with extensive knowledge of the sector and business environment.
Three years ago the Incorporation employed its first chief executive, who was previously a partner in a chartered accounting firm. The administration work is carried out by an external firm. The Incorporation has recently formed a transition committee to review the future administration of the Incorporation.
The Incorporation has seven members on its Board and has operating subcommittees in the following areas:
The Incorporation has a strategic plan which is reviewed annually. The strategic planning process is carried out by the Board which is assisted by a consultant. The business plan is also updated at strategic planning meetings. The review of these plans is carried out annually following the annual general meeting, normally held in September or October.
The financial year of the Incorporation ends 30 June with the annual budget being prepared and approved prior to 30 June.
The Incorporation receives many offers to invest; when considering investments the Board undertakes due diligence. This is carried out by the CEO and/or consultants. A hurdle rate may be applied to investments. The major change in governance since the inception of the Incorporation has been the review of the Incorporation’s policies and processes. This has resulted in a transition sub-committee being established to recommend strategic direction regarding governance. The Board has accepted suggestions from the subcommittee and is preparing to implement those considered necessary.
The Incorporation is currently reviewing its policies and performance against international and domestic best practice.
The Incorporation reports to shareholders in the following manner:
The Incorporation is at present preparing for the introduction of a website.
The Incorporation undertakes standard reporting mechanisms to measure financial performance. Trustees are provided with disks, which show all accounts: actual versus budget, and other financial milestones on a monthly basis.
In respect of the sub committees, budgets are provided for:
The Incorporation employs sound environmental practices in oil/gas exploration and metal removal. The Incorporation is reviewing their reporting mechanisms with the objective of enhancing performance measures.
The Incorporation currently does not undertake any formal Board performance review. However as part of the review the Incorporation is considering implementing Board performance measurements.
The Incorporation engages with shareholders through the ‘Whenua’ publication and the AGM. Meetings are sometimes held with groups of shareholders to discuss issues as they arise rather than at formalised meetings.
The Incorporation follows the procedures as contained in the Act. There are seven elected members and appointments are made on a three-year rotational basis.
The Incorporation recognises the difference between governance and management. This is illustrated through the appointment of a chief executive three years ago. The Board is the ultimate decision-making body on direction and planning. Management’s role is the implementation of the direction and plans. The Board and management have a clear understanding of their roles, and this helps to avoid any conflict between management and governance.
The chief executive has an employment contract based on KPIs. A committee of two review the chief executive’s performance. As the Incorporation does not directly employ staff, there is no need for formal employment policies but this will obviously be reviewed should there be a change in circumstances. The Incorporation however has service level contract agreements with external parties to whom work is outsourced. The chief executive has delegated authority to operate subject to the strategic and business plans and within financial limitation policies. The Board must be consulted on any expenditure over the set policy limit.
The Board of PKW Farms Ltd (subsidiary) has delegated authority to operate and manage the farms and to make their own policy decisions. The strategic plan and policies must be approved by the full Board; this includes investments and annual budgets. The decisions relating to lease buybacks, where the leases are contained in the land management plan, do not require approval from the full Board.
The Incorporation is mindful of the need to develop a governance succession plan and has recently appointed an associate director for a period of twelve months.
Board members are nominated and voted upon at annual meetings in accordance with the Act. The Board has no formal criteria for those standing. Representation has moved from mainly Taranaki shareholder based representation, to now include members from outside the province and in some cases, particularly in the subsidiaries, non-members of the Incorporation.
The Incorporation supports the professional development of their Board members encouraging them to attend suitable training courses.
Last modified: 7/06/2011
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