Peter Stanford: Muddle and poor research surround executives' pay

The issue of pay is absolutely, unavoidably down to trustees, writes our columnist

Peter Stanford
Peter Stanford

After too many years as a charity chair, there are some aspects of the work that I look back on with pride and a sense of achievement, and others for which I know - as my headteachers used to be fond of remarking - that I could have done better. Chief executive pay falls in the latter category.

This is one issue that is absolutely, unavoidably down to trustees. The chief executive cannot set his or her pay level or we would be utterly failing in our jobs. Yet whenever it came up at the appropriate trustee meeting, there was the chief executive sitting at the table with us. Did I (a) ask him or her to leave the room while, on the other side of a thin partition wall, we discussed how much he or she was worth; (b) allow the question of remuneration to be picked over by everyone present, in front of them, in a way none of us would have found tolerable; or (c), as chair, make a recommendation from on high, sure in the knowledge that most trustees would be so relieved not to have to get down to brass tacks that they would vote it through with little or no debate?

Not option (a): during a particularly nasty chapter in the charity's life, I once had to step out of the room while my fate was debated, and I have never felt more like a naughty schoolboy waiting by the headteacher's door. Option (b) would perhaps have been the most brutal and the most honest, but somehow we were just all too polite, middle class, English and embarrassed to talk about money. And yes, I know that is a very good argument for all those guidelines the Charity Commission produces on developing more diverse trustee boards.

So it came down, in a variety of guises, to option (c). Here's how it too often happened. Annual pay was tacked on to the end of the formal appraisal process. That may or may not be an HR disaster but, given the trustees' available time, it was how it had to be. We would all work hard to be critical friends, and often that appraisal meeting could be frank and bruising. Once we had finally achieved agreement with the chief executive - on goals, measurement of progress and our diverse judgments of how things were going - the question of money would finally come up.

To keep that discussion short, I would have done some research - mainly from job advertisements and by calling headhunters or other charity chairs of my acquaintance - to establish what I thought was the sector norm. We stuck, give or take a little, to the safe central ground.

Everyone nodded and that was it.

Hardly impressive, I know - but from informal conversations with others in the same role, I know it's not that unusual either. If you're not being paid for the time you put in as a charity chair or a trustee, it means that a discussion about the chief executive's pay takes on a slightly abstract quality. Yes, we are aware that the money has to be raised. Yes, we know that there are projects crying out for funds. But there is still a slightly surreal feeling of plucking figures out of the sky.

Perhaps that is how some of our biggest charities have ended up paying their chief executives so much, as exposed by a media hue and cry of late. It is a mixture of muddle, poor research, trustee embarrassment and a bit of bluster by the chief executives themselves - though I have to say that many of the worst culprits are not really what I would consider mainstream charities; they are more like businesses with a charitable veneer.

What we need urgently is proper information about how much charities pay their chief executives - collated anonymously, on the basis of turnover, staff and responsibilities, with some weighting for different areas of the sector. The informal research network I used needs to be replaced by something much more robust and transparent. The chief executive's salary should be shown in every set of annual accounts and he or she should be prepared to justify it publicly, while the chair and trustees should be equally ready to explain the logic of their award. No more doing it behind closed doors.

So hurrah for Sir Stuart Etherington and his plans to provide something along these lines from a joint National Council for Voluntary Organisations and Charity Commission working party. About time, I say - if only to spare my own blushes.

Peter Stanford is a writer and broadcaster, and was a charity chair for more than 20 years

- Read other stories on charity pay by visiting our Big Issue

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