Gender gap widens as housing chiefs’ pay soars
With risk comes reward. The chief executives of Britain’s 100 biggest housing associations are diversifying into a range of commercial activities – and their pay packets reflect this. Jess McCabe reports
For the full results of our survey click here or see the interactive table at the bottom of this page
The pay of housing chief executives is reaching new heights. Salaries are up. Bonuses are up. Even car allowances are up.
Every year, Inside Housing’s survey of chief executive salaries reveals how much the leaders of the biggest 100 housing associations in the UK are paid. And this year we have found that average salaries for the top job have climbed by more than 3% – well above inflation.
Basic pay for chief executives has risen for the third year in a row, reaching an average of £161,313 in the 2013/14 financial year – up £4,827 on 2012/13.
Chief executives earned an average £173,321 in 2013/14, including bonuses and car allowance – up £6,413 on 2012/13.
Why? As well as having a total of 2.3 million homes under management, housing associations say they are changing – and their chief executives have to be better equipped than ever to manage them.
Whether organisations are merging, building more homes or getting into market sale, private rent and other commercial activities, more is being demanded of chief executives. And, like a mountain climber, as they reach for higher summits, they are taking on more risk.
Mark Glinwood, managing director of recruitment consultancy Capital Insight, has sat on the remuneration subcommittees on the boards of housing associations – which are typically tasked with setting pay and conditions for the top executives.
He says: ‘Some of these roles at the top level, in terms of what they’re asking [of chief executives has been] increasing quite significantly over the last three to four years.’
The pay rises allow housing providers to keep pace with the market, and recognise their chief executives are filling bigger and more complex roles.
He predicts further rises next year: ‘These organisations will have also gone through pay restraints over the last two to three years.’
Yet housing chiefs are well paid in comparison with their public sector peers: most in our survey are paid more than the prime minister (£142,500).
And, Mr Glinwood notes, some chief executives are doing well in comparison with parts of the generally better-paid private sector.
But with tenants struggling through welfare reform and when housing professionals in general may have seen lower increases in wages, and as the Homes and Communities Agency is demanding that housing providers show value for money, how high can salaries climb?
Peak performance: who is the highest paid?
David Cowans is once again the highest-paid chief executive in housing in terms of total pay.
The commander-in-chief at Places for People, also the biggest association in the top 100, Mr Cowans takes home £432,928 in total.
This is a relatively modest 1.35% increase on his 2012/13 pay. But Mr Cowans is paid £100,000 more than the next highest-paid chief executive, Anchor’s Jane Ashcroft.
His salary is also more than four times that of the lowest-paid chief executive working for a top 100 housing association, Linda Adair Whittaker of NPT Homes, who takes home £104,000.
Chris Phillips, chair of Places for People, explains that the high pay reflects the demands of the job of leading the 144,000-home housing association.
‘Places for People has continued to diversify, grow and increase revenue over the last year,’ he says. ‘With government grant in sharp decline, the group is now involved in a vast range of activities, ranging from care and support through to maintenance and construction, leisure and financial services, all contributing to helping individuals and communities realise their aspirations.
‘David’s leadership has played a major role in the success of our business model, helping to generate significant investment for new homes as well as local communities.
He has also met the demanding performance criteria set by the board covering financial, social involvement, value for money, environmental and place-building targets.’
It is worth adding that Mr Cowans’ pay per home managed by the landlord is at the bottom of the scale. At £3 for each of the association’s 144,000 homes, he is, by that measure, one of the joint-lowest paid in the top 100, far below top earners Sinéad Butters, chief executive of the Aspire Group, who earns £17.04 per home and Richmond Housing Partnership’s David Done, who earns £16.69 per home.
Ms Adair Whittaker, the lowest-paid chief executive in our ranking, is by contrast paid £11 for each of the association’s 9,785 homes.
High altitude: who are the biggest climbers?
At first glance, some chief executives seem to have gained much bigger salaries this year. But closer examination reveals a more complex picture. David Ashmore, the outgoing chief executive of GreenSquare Group, had the highest increase in total salary this year, at more than 21% from £134,000 to £162,000. But the 11,520-home association explains that this is largely made up of a £25,000 one-off bonus.
Mr Ashmore retired in July 2013. In addition, the organisation explains, his pay of £127,187 in 2012/13 was artificially depressed after he took a period of unpaid leave during that financial year.
Likewise, Metropolitan, which paid chief executive Brian Johnson 11.25% more, told Inside Housing: ‘The increase shown is based on the fact that Brian was not eligible for a bonus in the year 2012/13 because he joined part-way through the financial year.’
For all the other housing chiefs in the top 10 in terms of total salary increase (box, right), salary increases made up at least part of their bigger pay cheques, reflecting either changes in the job, or high performance against their targets.
For example, Geeta Nanda, chief executive of Thames Valley Housing, took home £166,874, or 10% more year on year. The chair of Thames Valley Housing, David Clayton-Smith, says the association has had a successful year, delivering on key targets and objectives, including securing £200m equity investment to expand Fizzy [Living], its private rented sector operation.
When making these decisions, Mr Glinwood from Capital Insight says, boards are increasingly measuring up the pay awards for their chief executives in terms of fairness and what’s happening to pay in the rest of the organisation.
‘People have started to ask these fairness, equity [questions],’ he says.
‘If we are all in this together, that does need to be reflected in increases to all our staff.’
This is a discussion he has seen take place on remuneration committees, he says, where the emotional component of setting pay does factor in as well as the technical questions of the going rate for a chief executive, and their performance against set target.
Taking the whole of the top 100 housing associations, the average pay increase is 3.85% – more than the rate of inflation: the Consumer Price Index rose 1.8% in the year to April 2014.
It is also more than double the average housing staff pay increase of 1.44% in the same period, a survey of 60 associations published earlier this month by Capita has shown.
Not every housing chief has progressed rapidly up the pay scale. Nine housing associations paid their chief executives less in 2013/14 than in the previous financial year. David Montague, chief executive of 70,600-home association L&Q, had a 6.34% decrease in total pay. However, digging into the data, his basic salary went up from £206,000 to £211,150 and the reduction is down to a less generous bonus payment.
Former chief executive of Housing & Care 21 Pushpa Raguvaran’s basic salary and bonus also decreased, but that does not include a £174,000 ‘contractual notice payment’.
Ms Raguvaran resigned from the housing association in August 2013.
Gender bias: who is the highest-paid woman?
Only 22 of the top 100 chief executives are women. Their average basic salary was £163,389, lower than the average male chief executive, at £158,111.
And their average bonus, £2,968, was also lower than the average performance-related pay taken home by their male peers, which was £6,321.
Yet some women chief executives are among the best paid in the sector, whether by total take-home pay, pay per million pounds of turnover or pay per home.
Jane Ashcroft at Anchor is the second-highest paid housing chief executive – although the association says this is, in part, because it runs hundreds of care homes, and because of the size and complexity of the organisation.
Ms Manning from Capita says the broad trend is probably a result of female chief executives leading smaller organisations in jobs that command less pay.
This is still affecting the pool of candidates when a large housing association recruits for a new leader.
‘There are more men that have been chief executive longer, with more experience, that are getting that job,’ she says.
But Ms Manning adds that she has seen more female chief executives at smaller organisations, around the 5,000-home mark and falling outside the scope of our survey, who are gaining experience.
She expects these to start to rise up the ranks: ‘It’s going to change. I’m confident.
‘There are some fantastic female chief executives out there.’
Bonuses of contention: who receives the biggest performance-related payment?
David Cowans from Places for People also received the biggest bonus of the top 100 at £112,236.
The board of a housing association is responsible for setting the pay and bonuses of chief executives. Some boards vigorously defend the use of bonuses as a way to keep their chief executives on the ball.
Neil Goulden, chair of the board at Affinity Sutton, explains the association has a deliberate tactic to place ‘a significant proportion of the reward package of its chief executive and senior managers at risk.’
‘In other words,’ he says, ‘if the organisation doesn’t deliver excellent results, then this part of their remuneration isn’t paid.’ Affinity Sutton gave its chief executive, Keith Exford, a £36,255 bonus – one of the highest in the top 100.
Mr Goulden says: ‘Affinity Sutton delivered outstanding results in 2013/14, including achieving a record surplus for reinvestment in our homes and communities, delivering more than 800 new homes as part of our plan to build 10,000 new homes over 10 years, meeting a customer satisfaction target of 80% and seeing employee commitment reach record levels.
‘Given this level of success across a wide range of measures under Keith Exford’s leadership, the remuneration committee believes the approach of linking bonuses to targets represents excellent value for money.
‘Indeed our reward policy is to pay all staff members a bonus depending on whether the business meets its targets with a specific focus on financial performance and customer satisfaction.’
Steve White, the outgoing chief executive of 50,000-home Hyde Group, also receives one of the larger bonuses. Julie Hollyman, chair of Hyde’s board, explains that bonuses are set by the remuneration and appointments (R&A) subcommittee of the board.
‘The payment of a £31,750 bonus to Steve reflects the group’s excellent performance and achievements against predetermined, specific and very challenging organisational and personal objectives during the 2013/14 year,’ she says. ‘The R&A committee agreed this year’s bonus payments to Steve White and the other Hyde Group executives in May 2014 after the objectives had been achieved. The timing of Steve’s leaving did not, in any way, influence the level of bonus awarded to him.’
By contrast, David Ashmore’s £25,000 ‘ex gratia payment’ was received because he retired as chief executive of GreenSquare during the year, the association says.
Although the proportion of chief executives who received a bonus remained static – at one-third – the average for those that received one in 2013/14 was £16,737, up slightly on the previous year’s £16,047. The total bonus pool was up 5.7% from £516,576 in 2012/13 to £546,056 in 2013/14.
Pension pot holes: who can look forward to the most comfortable retirement?
On average, housing associations contributed £18,612 to their chief executive’s pension pots, either by contributing to their pension scheme or giving a payment in lieu for those chief executives who manage their own pension. This is a rise on last year’s average of £17,663, which is no surprise because pensions are calculated as a percentage of basic salary.
More than two-thirds of chief executives are on final salary, defined benefit pensions. Employment consultants say that, when their whole payment package is taken into account, this makes them among the best paid in the public sector – and even better paid than many private sector peers.
However, times are changing. Seven chief executives are switching either in April 2013 or April 2014, from a final salary scheme to defined contribution pensions. These pension pots do not guarantee a pension at the end. This is a sign of a sector-wide cost savings to reduce associations’ mounting pension liabilities that affect not just chief executives but all the employees of those organisations.
In some cases this has led to seemingly dramatic rises in the amount housing associations are contributing to their chief executives’ pensions. Ms Ashcroft at Anchor’s pension contribution rose from about 20% to about 30% of her basic salary.
Pamela Chesters, chair of Anchor’s board, explains: ‘The increase on last year reflects the fact that Jane moved from a defined benefit pension to a defined contribution scheme. While this happened some years ago this is the first year it has been recognised in her remuneration package.’
Sue Manning, director of human resources and rewards at consultancy Capita, points out the housing sector is just going through the same transition as the private sector to direct contribution pensions, which cost employers less.
However, she warns, that as the transition takes place, some executives may be reluctant to move jobs, if it means swapping a final salary for a defined contribution package.
‘They’re not going to pay out as much as final pay schemes are going to,’ she says. ‘If you are not careful, pensions can to a certain extent become a reason people won’t move jobs.’
Every year, Inside Housing compiles its listing of chief executive pay by sending a detailed survey to around 120 of the biggest housing associations in the UK measured by homes owned and managed. We ask for details of basic salary, bonuses, car allowance and pensions, as well as some questions about turnover for the financial year which help us roughly compare the pay of the chief executive against the organisation’s financial performance.
The top 100 is then chosen based on the 100 housing associations with the most stock.
Detailed checks are carried out before publication, including sending back the information we plan to print to every housing association to allow them to make any corrections.
Where a chief executive has changed jobs midway through the financial year we have printed annualised details of the outgoing chief executives, except in the case of Matthew Harrison, who took over as chief executive of Great Places Housing Group less than two weeks into the 2013-14 financial year.
We work out a chief executive’s total pay by adding together their basic salary, any bonus received plus any car allowance.
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