Housing association chief executive salary survey 2018

Another factor though is pensions. Individuals cannot put more than £1m in their pension pots without paying more tax – and although this is not a factor that worries most of us, for high-earning chief executives nearing retirement on generous defined benefit pensions, many will have reached or are nearing this limit. This has led some associations to boost pay, in compensation for money not being added to the boss’s pension, points out James Tickell, partner at Campbell Tickell. Another factor is that many retiring chief executives will be getting pensions based on their final salary – which again creates pressure to increase their pay in their last few years in office.

But pay rises in our sector pale in comparison to private sector chief executives – which the CIPD found rose by 11% to nearly £4m.

A comparison with charities is also illuminating – according to Third Sector, last year the average charity chief took home £255,000, well above most housing association bosses. The Wellcome Trust topped the chart of the largest pay packets, with a sum just over £3m – not, interestingly, to its chief executive, but a member of its investment team.

How is this data compiled?

Inside Housing sends a detailed survey to the 180 biggest housing associations in the sector, measured by number of homes owned and managed. This year we have added a handful of organisations to the list and include 182 housing associations, due to the high level of merger activity.

The vast majority of housing associations respond promptly with information about their chief executive’s pay. Data from a small number of organisations has been taken instead from their annual accounts, which must list the total pay of their highest-paid executive, which in most cases is the chief executive.

A very small number of associations refused to respond to our survey and have not yet published their accounts. We will follow up with details of those specific organisations once the accounts have been published.

We must also make a special note about Apex. This organisation appears in the table with no data for either 2017/18 or 2016/17. This is because it refused to respond to our requests, and has also ignored requests for copies of its financial accounts – public documents which are meant to be available if you ask for them, if they are not published on an organisation’s website.

• Places for People tops chart with £591,256 pay
• double digit increases for 17 chiefs
• 69 saw pay increase exceed inflation

David Cowans, chief executive of Places for People, once again is the highest paid chief in the sector. He took home a total of £591,256 – which includes a mega-bonus of £182,525 (it’s worth noting that 113 chief execs were paid less in total than Mr Cowan’s bonus). This is a pay rise of 2.1% on last year.

The nearly 200,000-home association has provided a breakdown which attributes 45% of Mr Cowan’s wages, bonus and benefits to Places for People’s social housing activities, and the rest to its “non-social-housing” businesses.

The organisation also says, via a spokesperson: “Under David Cowans’ leadership, Places for People has delivered another strong set of results over the last financial year. The group chief executive’s total remuneration includes a bonus, which is set every year by the group board and is based on his performance across all business units against environmental, social and financial targets.”

The club of best-paid bosses mostly doesn’t change much year by year. But we have seen some alterations, mostly driven by mergers and changeover of staff. We have Nick Apetroaie taking home £279,000 as Viridian merged with Amicus Horizon to form Optivo – a 57.9% rise. Then Brendan Sarsfield, whose pay hit £278,750, as he took over the newly enlarged Peabody from Stephen Howlett – whose pay the association refused to disclose. Next is Brian Johnson, who left Metropolitan on £275,791.

A Metropolitan spokesperson says: “Brian’s annualised basic salary increased year on year by 2%, in line with the average salary increase of all colleagues across the business. His bonus was based on a number of demanding performance criteria – including both corporate and individual targets – set by the board. The year-on-year increase in his bonus reflects his improved performance against these targets.”

When we turn to the chief executives with the highest percentage increases, the same story emerges, as do some of the same names. Seventeen chiefs saw their total pay go up by more than 10%, and 69 went up by more than inflation (or 2.2%).

Phil Adams, boss at Greenfields, leads the way with a 69.2% rise – made up largely of a one-off retirement payment.

A few of the associations simply put big rises down to performance. Andy Orrey, chair of Cross Keys Homes (CKH), for example, notes the organisation’s 25% increase in surplus, and record of building more homes than it ever has before as reasons for paying its chief Claire Higgins 18.3% more this year. He adds: “Claire is delivering outstanding results and commitment to CKH and the wider community and her remuneration reflects that.”

Anchor’s Jane Ashcroft saw her pay rise 17.7%, making her the second highest paid in the sector this year. The association’s chair Pamela Chesters, though, says Ms Ashcroft’s pay is benchmarked to the care sector, not to housing.

“Total remuneration reflects performance in meeting demanding financial, compliance, customer and employee targets,” she says – noting that the chief’s basic pay remained unchanged, and the increase is a reflection on her bonus.

• 29% increase in average bonus
• fewer CEOs receiving performance-related pay
• Places for People CEO awarded £182,525 bonus

Fifty-four chief executives received a bonus in 2017/18, actually a slight drop on last year’s figure of 59. However, the average award rose by 29% from £15,788 to £20,386.

Looking at the top 10 biggest payments tells part of the story – like last year, Mr Cowans at Places for People took home the largest slice, with £182,525 (this is actually marginally down on his bonus the previous year).

But last year’s level of bonuses swiftly dropped, with the second highest payment being £41,500. This year is rather different, as the table shows, with five payments in excess of that figure.

As might be expected, organisations strongly defend their chief executives’ bonus payments, with a typical comment coming from Gordon Holdcroft, chair of Sovereign’s board, talking about Ann Santry’s £33,567 bonus. “Our remuneration, including bonus, takes into account a range of factors such as market comparatives as well as personal and corporate performance. Ann’s bonus reflected, among other things, an extremely strong year following merger,” he says.

As in previous years, the bottom end of the bonus scale shows a number of chief executives taking relatively modest bonuses of less than £1,000, generally as part of an organisation-wide scheme.

Eighty bosses are still expecting ‘defined benefit’ pensions – where they will get a fixed amount.

That said, only 28 will now get a pension based on their final salary, with the rest getting something based on a career average, or a combination of the two in organisations which have switched methods of calculation.

Eleven chief executives received payments in lieu of pensions, which is also likely linked to this trend, with the rest either taking no pension or having a defined contribution arrangement.

• BME chief executives were paid 12.4% less than white chief executives
• Female chief executives were paid 8.2% less than male chief executives and saw pay grow at less than 1%
• Only four BME chief executives among 182

For the first time, Inside Housing asked housing associations to provide some basic data on the demographics of their chief executives – including whether they identify as BME, LGBT or have a disability.

Out of 182, 120 answered these questions, allowing us to for the first time reveal the extent of the race pay gap at chief executive level. Only four chief executives identified as BME. As well as being an incredibly low number, this also does make the task of identifying an average for the sector less reliable, as the sample size is so small.

However, the data shows that these executives took home on average £153,814. For the 116 who identified as white, average pay was £173,273. In other words, that is a 11.2% pay gap between BME and white chief executives.

Gina Amoh, chair of a group of 14 BME London landlords, says: “It is difficult to call our sector inclusive, when these figures paint such a dispiriting picture. Our sector leaders must step up and change. Some are starting to do it, and this is welcomed, but the numbers are still too small.” (It should be noted that Ms Amoh is also a housing association chief executive, but her organisation Inquilab has just under 1,300 homes and so is too small to be included in the salary survey.)

The biggest pay packet of a BME chief executive was taken home by Geeta Nanda, counted in the survey as the 27th highest paid. She appears in her previous role as boss of Thames Valley, where she took home £211,173 in total, a figure that has been annualised as she stepped down halfway through the financial year. She has since moved on to head up Metropolitan, where her annualised basic salary was £220,000.

So how about the gender pay gap?

Well, there were 58 female chief executives – a reasonable jump on the 49 in last year’s survey, meaning they make up 32% of chief executives. (This may have been affected by the addition of a small number of housing associations in this year’s survey – see ‘Methodology’ for more information on this.)

So far, so many small steps towards breaking the glass ceiling, but let’s look at how much they’re paid. On average, female chief executives took home £163,559 in total pay. This is an increase of 0.8% on last year’s average pay of £162,344.

However, when we look at what has happened to male chief executive pay, the story gets a bit more complicated. In this year’s survey we have 124 male chief executives, and they took home an average of £178,131, up 4.7% on last year’s average.

That means the gender pay gap has rapidly expanded to 8.2%, from only 5% in last year’s survey.

The survey does show a number of highly paid female chief executives. The second-highest paid chief executive in the land is Jane Ashcroft, on £414,288. Yet she is the only woman in the top 10. And if you take a look at the bottom of the table, eight out of the 10 lowest paid chief executives are women.

A quick note: we also asked if chief executives had a disability and if they identify as LGBT. However, rates of answering these questions were low. Two chief executives identified as disabled and one as LGBT. However, due to low response rates, we believe this reveals more about hesitancy to answer the question than the true demographics of the sector. For example, only 21 organisations responded to the question about disability. We will continue to ask these questions in future years.