Checklist: Setting chief executive pay

By governance expert Mike Hudson

Mike Hudson
Mike Hudson

Recruiting and retaining a great chief executive is one of the board's most important responsibilities. The strong demand for the limited number of people with finely tuned skills and experience needed for these demanding positions makes this task challenging.

Money is not the only motivation for chief executives, but pay is part of the package and there is genuine public concern about their salaries. Most boards of larger charities delegate salary-setting to remuneration or other committees. Good practice includes gathering evidence from charity salary surveys and comparison with charities of the same size, in the same sector and in the same location.

The recommended salary should also take account of remuneration in the rest of the organisation and be linked to the achievement of personal performance objectives. The salary should be approved by the full board. Board members and chairs in particular should be willing to explain their decisions to stakeholders and the press.

Good chief executives are crucial to charity effectiveness. Appointing and retaining them, while maintaining the charity's reputation, is a crucial judgement that all boards must make rigorously.

Topics:
Governance Advice

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