Deciding how much charities should pay their executives is not the job of the Charity Commission, Acevo or the public, says Michael King.

“Stay in the same house, taking what food and drink they have to offer, for the labourer deserves his wages” – Luke 10 v.7

My quotation from the New Testament should not be taken as encouraging charity CEOs to remain forever in the same position, indeed it may be better for their charity and – dare I say it for their career - to subject themselves to different challenges; but it is not right that CEOs should not be paid the wage they deserve. 

So what is this deserved wage?  Well, with considerable respect, it is not for the Charity Commission or its chairman to decide but then neither is it, in the case of any particular charity, the concern of Acevo.

The right salary and benefits have to be what the charity’s trustees consider is necessary to attract and to retain a CEO of the calibre which their charity needs to implement the strategic goals which they set to drive the charity forward to improve impact and effectiveness for its beneficiaries and to manage the people (staff and volunteer workers) and logistics which make the charity what it is.  It is only the trustees (if they really understand the charity which they govern) who can decide what the terms of their CEO’s employment should be and what the charity can afford.

There have been debates in the last couple of years about the remuneration of many people in the public eye, from bankers and footballers to Members of Parliament and lawyers, so there is no reason why charity CEOs should be exempt from scrutiny. The trouble is that the reported comments from the chairman of the Commission, however well-intentioned, can play to the crowd and militate against the Commission’s statutory objective “to increase public trust and confidence in charities”.

The Commission does have a good story to tell about the organisations it regulates – by and large charities do provide public benefit, are compliant in legal obligations, are effective in their use of resources and are accountable to donors, beneficiaries and the general public and CEOs have a great deal to do with that.  A greater priority for the Commission than the employment terms of CEOs is how to use its much-diminished workforce to handle the few but inevitably newsworthy cases where public trust and confidence is likely to be damaged.   

Returning to the question of how trustees should set terms of employment for their senior employees, might I suggest that it is not always necessary to pay a new CEO more than the previous incumbent and one should avoid placing senior staff on inflation-proof increments with long periods of notice. Matching salary increases to performance via KPIs seems more appropriate and is happily becoming more common in commercial life.  

Michael King is a partner at Stone King