Motability chair defends high executive pay at connected company

Lord Sterling of Plaistow tells MPs the board of Motability Operations is pursuing the right policy, but the charity's board wants to be more involved in remuneration decisions

The chair of the disability car charity Motability has defended high executive pay at its connected company Motability Operations – which included a salary of £1.7m for the company’s chief executive, Mike Betts – at a meeting with MPs yesterday.

Appearing before a joint session of the Treasury and Work and Pensions select committees, Lord Sterling of Plaistow, chair of the Motability charity, said his board was "comfortable" that the board of Motability Operations was pursuing the right policy, but added that the charity’s board wanted "to be more involved in those decisions".

Motability Operations, which runs a government-backed scheme to provide cars to disabled people, was last year found to have paid Betts £1.7m in the year to 30 September 2017, including a long-term incentive plan payment of almost £727,000.

But MPs criticised the size of the remuneration packages for senior executives at Motability Operations and  criticised the company’s parent charity for failing to have sufficient influence over the setting of pay for the company’s directors.

In a statement made after his appearance in front of the committees, Sir Amyas Morse, comptroller and Auditor General at the National Audit Office, which released a report last month about Motability, said that "executive pay at Motability Operations has been very generous and the Motability charity has been unable to exert sufficient influence over pay".

Motability has accepted all of the NAO’s recommendations for reform.

Nicky Morgan, chair of the Treasury Select Committee, said in the session yesterday that the charity had a "very cosy relationship" with Motability Operations and had forgotten it is supposed to be at "arm’s length".

She also asked why Motability had failed to send representatives to remuneration committee meetings since 2013, despite having raised concerns about executive pay at the company in 2016.

Plaistow said the charity’s board was kept "fully in the picture" by the remuneration committee’s chair, but the charity was determined "to have greater influence in time to come".

Neil Johnson, non-executive chair of Motability Operations, told MPs that the Motability scheme was a "very complex large business" and had been run on a commercial model that had made the company the best in the country for customer service.

He said that "what we are trying to do is deliver the scheme with a very good management team" and remuneration levels were a response to risks that the company would lose its entire top team to a struggling firm during the 2008 financial crisis.

"It was the right thing to do, because it has worked," Johnson said.

He added that a review of executive pay would see remuneration fall by 20 per cent once the controversial long-term incentive plan had ended.

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