Guidance issued to boost good governance around executive pay

The Chartered Governance Institute has published new guidance to help charities improve their policies and practices around executive pay.

The guidance is aimed at remuneration committees of charities and has been published amid concerns that charity leaders’ pay is not being reviewed regularly.

A survey by ACEVO last month found that almost half (49%) of charity leaders do not have a formal salary review on a regular basis.

“Remuneration committees have a critical role to play in balancing the interests of donors and other stakeholders with the need to attract senior leaders who will be effective in using a charity’s resources to deliver the charity’s stated purposes to those communities it is set up to serve,” said the Institute’s head of not for profit policy Louise Thomson.

“These model terms of reference will allow remuneration committees to provide the evidence necessary to allow trustees to make informed decisions about the pay and benefits for senior staff, thereby helping them to attract and retain appropriately-qualified staff.”

Thompson added: “The issue of executive pay in the charity sector and other parts of the economy is a perennial issue and one that attracts the attention of the media and sector commentators alike. This is particularly true now given the detrimental financial impact of the COVID-19 pandemic on society.

“While there has always been the expectation that charities should be transparent about how they spend their resources, the requirement for decisions about levels of executive pay to follow a robust evidence-based process and be reasonable and defensible has never been higher.”