Issues surrounding chief executive pay aren't going anywhere soon

08 Jun 2015 Voices

While the UK’s charities are by and large being more transparent about pay, the article in today’s Sun proves that the issue isn’t going to just go away, says Rosie Chapman.  

While the UK’s charities are by and large being more transparent about pay, an article in today’s Sun proves that the issue isn’t going to just go away, says Rosie Chapman.  

As today’s Sun illustrates only too well the debate about senior executive pay is not exclusive to charities, nor has it gone away.  

The pay of University vice-chancellors is also under the media spotlight and a few days ago I spoke at the Universities and Colleges Employers Association’s (UCEA) seminar on setting senior pay in Higher Education Institutions and universities.

Here’s a snap shot of some of the emerging trends:

Post General Election mood music

It will be interesting to see how many MPs in the new Parliament believe that that charities should not pay their chief executives more than £100k. According to nfpSynergy it was nearly 50 per cent of MPs who held that view before the Election. As today's Sun story illustrates there is still a perception amongst some MPs that charity chief executives should be paid no more than the Prime Minister has elected to take.


I was pleased to report to the UCEA seminar that, while the NCVO charity senior executive pay Inquiry recommendations on transparency have met with some resistance (which is pretty determined in some quarters) the acceptance of increased transparency is slowly gaining traction as illustrated in a number of charities’ latest sets of annual accounts.  Early adopters (in full or in part) include Action for Children, Amnesty international UK,  British Heart Foundation, Brooke Young People, Mencap, RNLI, Save the Children and Shelter.  

This reflects the cross-sector trend towards enhanced pay transparency.  For example, in December 2014 the Equalities and Human Rights Commission advocated the following arguments in favour of greater transparency across all organisations:

  • Lowers gender pay gaps
  • Creates a better employer ‘brand’
  • Improves perceptions of fairness and engagement.

The role of Remuneration Committees

In the HE sector Remuneration Committee (RemCom) terms of reference are increasingly being expanded to look at the wider pay picture across the institution in arriving at appropriate pay for senior executive and paid non-executive roles. There is also a trend for such committees to be chaired by a lay member other than the chair. This feature may have merit for some charities to consider.

There is scope for RemComs to use more benchmarking information when making comparisons. One speaker told that the seminar that, while such information should not be used in a formulaic or mechanistic way, RemComs could look at wider public data (for example NHS/Clinical Commissioning Groups, local government, senior civil service and local government) when setting salaries and, for specialist roles, look at the global market.  This could also be relevant to some larger, specialist charities.

Where pay is pitched

In terms of actual pay, the vast majority of HE institutions now target a median pay position when recruiting and paying their senior staff. This may reflect the improving market, and it is an approach that may have parallels with many charities’ remuneration policies.

On the horizon – reporting gender pay gaps?

Section 78 of the Equality Act 2010 (the Act) contains a power for the government to make regulations requiring mandatory gender pay gap reporting. A voluntary reporting initiative that was introduced in 2011 largely failed and so the requirement will become mandatory at some point before 2020 requiring employers with at least 250 employees to publish information about their gender pay gap.

While the precise details of the new measures will be subject to consultation (and no doubt debate about whether it applies to staff, whether in-house or ‘contracted out) it is likely that such companies will be required to publish on an annual basis, as a minimum, the gender pay gap for full-time and part-time staff and the overall pay gap.  
Plenty therefore for charities to think about as they enter their next round of pay negotiations...

Rosie Chapman is an independent charity adviser.