Ministers are reminded that they are responsible for managing the performance of Chief Executive Officers within their portfolios.

Ministers have a delegated responsibility as the employer to both enter into a contract of employment with CEOs and to meet a statutory requirement for performance to be reviewed at least annually. Performance Agreements are an essential tool to ensure understanding between a Minister and a CEO on the major tasks and accountabilities of the CEO. They

• must form part of the CEO's contract of employment;
• must comply with a requirement of s.71 of the Public Sector Employment and Management Act 2002 that executive performance is reviewed at least annually; and
• must require CEOs to certify that credit card usage in their agency is in accordance with Treasurer's Directions.

Further information on performance management is in section 4.2 of the SES Guidelines (available on the Premier's Department website), which also includes an appendix that reproduces the comprehensive guidelines on CEO performance agreements issued with Premier's Memorandum 99-05.

The Strategic Management Calendar (Premier's Department Circular 2003-38) identifies appropriate times for formal discussions between Ministers and CEOs on performance issues.

The recent Compliance Review of CEO Contracts undertaken by the Audit Office also highlighted a need for the SES Guidelines to be followed when determining salary sacrifice arrangements for CEOs and other executives/senior officers who include a motor vehicle in their remuneration package. Guidelines on salary packaging are in section 6 of the SES Guidelines.

Where Ministers have agencies within their portfolios whose boards are responsible for the appointment, performance evaluation and remuneration of CEOs, they should ensure such agencies adhere to all relevant policies issued by Treasury under the Commercial Policy Framework that pertain to CEO contracts and remuneration.

Bob Carr
Premier.