Andrew Hind discusses pay ratios and how much he thinks chief executives should be paid.

Last month’s attack by the Daily Telegraph on what it considers to be excessive salaries paid to charity CEOs was just another gratuitous salvo in that newspaper’s attempts to undermine public confidence in the sector.

Back in June it ran an editorial which tried to do exactly the same thing. On that occasion the Telegraph asserted that many charities “take state funds which they then use to engage in political lobbying”. Recent examples quoted were “Cafod’s support for climate justice” and “the opposition of some charities to the government’s welfare reform agenda”.

The charity sector, it concluded, “ought to be concerned with giving”.

So when the same newspaper has a go at international NGOs paying their chief executives more than £100,000 there will no doubt be plenty of ‘disgusted of Tunbridge Wells’-type sentiment around for a while, but should charities really let that bother them?

At one level the answer is – of course not. The argument is now well rehearsed that these are immensely complex jobs. The CEO of a large charity is responsible for multi-million pound budgets; huge numbers of donors, staff and volunteers; a national (and, for NGOs, international) span of operations; and a high public, political and media profile.

In other sectors, jobs of similar – and indeed much less – complexity now command salaries north of £100,000 on a routine basis. Just look, for instance, at what local authority chiefs take home these days.

So I have no difficulty supporting the argument that large charities have to compete in the marketplace to attract CEOs of the highest calibre; and these days that often means paying over £100,000 (see our survey of top-100 charity CEOs on pages 20-25).

And yet, having said all that, I confess I am one of those old-fashioned people who still believe that there is an important element of altruism attached to working at any level in a charity; including as CEO.

In my view a charity CEO should be paid a little less than he or she could command in another, noncharitable, setting.

Trustee involvement on pay

It is also the case that trustee boards in most large charities haven’t got fully to grips with the issues attached to senior executive pay

Yes, most of them now have a remuneration committee which sets the CEO’s salary, but in too many cases board focus stops there.

It is not unusual to see a market competitive salary set for the CEO, but for members of the senior management team to be on salaries of only around 50-60 per cent of that paid to their boss. Is that fair?

Similarly, there are very few charities which follow Cafod’s lead (the same agency criticised by the Telegraph) in setting a ratio to govern the link between highest-paid and lowest-paid staff in the charity – in Cafod’s case the limit is 5:1. More boards should give this – and paying the living wage to lowest earners – serious thought.

And how many boards set clear and transparent performance-management targets for their CEOs – far less publish them as FTSE companies do – to ensure that they are held accountable for delivering at the level that their responsibilities and salary demands? Not too many, I can tell you.

If trustees of large charities are encouraged to consider these issues more closely as a result of the recent press coverage, the Telegraph’s journalists will have contributed to building a stronger and more robust charity sector. That would really upset them.