Large charities should give reasons for executive pay levels, Acevo guide recommends

Sir Stephen Bubb, head of the chief executives body, tells the Public Administration Select Committee that transparency on salaries will help charities measure how well they are achieving their objectives

Sir Stephen Bubb
Sir Stephen Bubb

Large charities should publish the rationale behind the pay levels of their executives, a new guide on remuneration in the sector from the chief executives body Acevo recommends.

The Good Pay Guide, launched yesterday, says larger, more complex charities should routinely publish a document describing how trustees set pay and listing directors who receive large salaries, and ensure  "every effort is taken to draw public attention to it".

The idea was based on a press release put out by Christian Aid describing how it sets its pay after the size of its chief executive's salary was criticised by a newspaper.

The guide also advises publishing an organisational pay ratio that shows the relationship between the lowest and highest salaries in the organisation.

It recommends that chief executives have regular, formal appraisals carried out by the chair and trustees. More than a quarter of charity chief executives do not have this type of assessment, it says.

Charities should also have remuneration committees and pay and benefits should be linked to agreed performance targets and the organisation's business plan, and benchmarked against comparable roles, it says.

The guide was published yesterday shortly after Acevo's chief executive, Sir Stephen Bubb, spoke about it at the House of Commons' Public Administration Select Committee hearing on charity chief executive pay the same day.

"I think it will put in context the issue of pay," he told MPs. "The overall objective of a charity is to deliver benefit to their beneficiaries – public benefit. We should measure what charities do on their output and their impact, and pay is only one of the factors to help govern that."

He said the next Acevo annual report would state his £104,000 salary rather than the band it fell within. He said he was the only person paid more than £60,000 in the organisation and the lowest paid staff member earned £20,000. The ratio between the highest and lowest paid at Acevo was 1:5, he said.

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