The Charity Commission recently warned the disability charity Motability that the £1.7m salary paid to the chief executive of a connected company could be viewed as excessive and raise reputational issues for the charity.
The statement from the regulator came after a story was run on the front page of the Daily Mail this morning that criticised Mike Betts, the chief executive of the Motability Operations Group, the commercial service for Motability, a charity that provides cars to disabled people. Betts was paid £1.7m in the year to 30 September 2017.
In the latest accounts for Motability Operations Group, the highest-paid director was given a basic salary of £549,258 and performance-related payments of £262,624.
The accounts, which were published last month, reveal that Betts also received £137,314 of payments in lieu of pension and £25,057 in benefits, which gave total emoluments of £974,253.
But notes in the accounts show that a long-term incentive scheme resulted in a further £726,617 being paid to Betts, which means he earned £1.7m for the year covered by the accounts.
The accounts say that the LTIP scheme was closed in December 2015, but it is a three-year scheme and will continue to be paid until the end of 2018.
Other senior salaries at the company revealed in the accounts include £430,000 – not including LTIP – paid to Matthew Hamilton-James, group finance director, and £173,000 paid to the company’s chairman, Neil Johnson.
The charity also holds more than £2.4bn in reserves, according to the accounts.
A spokeswoman for the Charity Commission said that because Motability Operations Group was not a charity, it did not come under the regulator’s jurisdiction.
But she added that the regulator had "recently" carried out a detailed review of the charity’s financial accounts and of its relationship with the company.
"That review did not identify regulatory concerns about the charity’s governance or its relationship with the commercial company," the spokeswoman said.
"It is not for the commission to comment on the pay of the chief executive of a large non-charitable commercial company.
"However, we have made clear to the trustees of the charity Motability that the pay of the chief executive of its commercial partner, Motability Operations, might be considered excessive and might raise reputational issues for the charity. These reputational issues are for the trustees to manage."
The spokeswoman said the commission also highlighted the "conservative" reserves policy operated by Motability, but there would be no further role for the commission as regulator at this time.
In a statement, Motability said that the charity’s trustees were examining the content of the Daily Mail story and would respond "later today".
The National Council for Voluntary Organisations’ report of the inquiry into charity senior executive pay, which was released in April 2014, says that charities should include highest earners in their accounts regardless of whether they work for a subsidiary company or not.
The report says: "Where a charity has a structure that includes subsidiary trading companies, these will appear in the charity’s consolidated accounts. Any staff employed within such companies who also fit within the criteria for key management personnel, or the charity’s highest-paid individual, should also be included in the charity’s report and statement of its senior staff remuneration.
"In all cases, the definition and disclosure should include the charity’s chief executive, irrespective of his or her salary."