The Cabinet has approved pay rises for Mighty River Power's chairperson and the state-owned company's directors.
The Government is to sell up to 49% of the energy company within the next two months as part of its plan to partially privatise some state-owned assets.
Mighty River Power's chairperson Joan Withers's pay will rise by $52,000 to $150,000, while each director will take home $85,000 a year, up from $49,000.
Prime Minister John Key said on Thursday it is sensible to pay the directors tens of thousands of dollars more for their work and believed the increases are appropriate.
"It's important that they can attract the right people. I think it's also realistic to get that dealt with now, because their fee structure is out of whack with what we'd see in terms of publicly listed companies.
"I think it's sensible to make that step now; it's consistent with what we see in other modern type companies like Air New Zealand."
State-Owned Enterprises Minister Tony Ryall said the directors current fees are well below those paid by comparable listed companies such as Contact Energy which pays its directors $115,000, Trustpower $75,000 and Air New Zealand $82,000.
Mr Ryall said if the directors weren't paid more, there was a risk they might quit.
"It's not a risk the Government wants to take. We want to secure the services of these directors - we think they make a contribution to the company and we think the fees that we're going to pay are less than what they'd be getting if they are running Contact Energy, but they are reasonable in the circumstances."
Green Party co-leader Russel Norman doubts that would've happened and says they are getting a pay increase because Tony Ryall wants to privatise the company. He says the pay rises are outrageous.
The Labour Party also says the fees are exorbitant - particularly when parliamentary oversight of Mighty River is about to decrease and their job is arguably becoming easier.
State-owned enterprises spokesperson Clayton Cosgrove said a 73% pay rise is too much and questions what has changed in workload.
Labour and the Greens believed households and businesses would pay for the rises through higher power prices.
The Mighty River Power share offer and other details about the float are expected to be released on Friday. The directors' pay rises will take effect once the company is listed.