The Consumers’ Association, the charity behind the Which? publications and brand, is ending a controversial bonus scheme that netted several senior executives of its commercial arm six-figure payments.
But the organisation’s Interim Review From 1 July to 31 December 2016, published last week, shows that Peter Vicary-Smith, its chief executive, will receive a one-off payment of £83,000 due to the scheme’s closure.
The association has been criticised by some members for its pay and bonus policies for a number of years, and was the subject of a Third Sector investigation last year that showed bonuses worth a total of £2.24m were set aside by the charity in the year to 30 June 2016.
The charity’s accounts, published last year, showed that its long-term incentive plan, which incentivises senior management to deliver long-term growth across Which?’s commercial business, meant that Vicary-Smith received a £125,000 bonus under the scheme.
Senior staff receive long-term incentive plan scheme payments only for work carried out for the charity’s commercial arm.
Other members of the charity’s executive team also received six-figure LTIP bonuses, as well as basic salaries worth hundreds of thousands of pounds a year.
But the interim review says that the charity has decided to discontinue its LTIP scheme as part of a wider review of its pay policies.
Which? announced at its annual general meeting last year that it was setting up a remuneration committee to lead the pay review, and the interim report says that the consultancy firm Mercer is working with the committee during this process.
The interim report says: "Back in 2012, we established an LTIP to drive transformational commercial growth, which exceeded its objectives. However, some members expressed concern about our approach.
"We have listened and reflected on this and have now taken the decision to discontinue the previous LTIP scheme for our senior executives and to review how we undertake long-term incentivisation for our senior team in the future."
The report says "there is a role for short, medium and long-term incentives", but it will now agree new benchmarks, "taking account of both commercial and mission-related objectives".
It says the previous maximum level of payments should be significantly lower in the future.
The interim report says Vicary-Smith told the charity he would continue to work to its long-term objectives, but he no longer wanted to be eligible for the LTIP’s financial awards.
The interim report indicates that Vicary-Smith will be paid one-off compensation worth £83,000 during 2018 and 2019 because of the closure of the LTIP scheme.
Limited compensation will also be paid to other senior executives affected by the LTIP’s closure, a spokesman for Which? confirmed.
The report confirms that the remuneration committee’s work is ongoing and formal recommendations will be made later in the year.
The spokesman said: "We are currently undertaking a review of our remuneration policy. Although we remain of the view that we must pay competitively and that there is a role for incentives to drive growth, the previous LTIPs will be discontinued and we expect the maximum level of payments will be significantly lower in future."