Chief executive salary survey 2017

See bottom of this article for notes

The stagnation in average bosses’ total pay is set against a backdrop of continued belt-tightening across the sector. The ongoing annual 1% rent cut continues to bite, while welfare reform has hit social landlords’ income too, by inflating both the level of rent arrears and the costs of
collection.

What about the rest of the workforce? According to the most recent data from the Office for National Statistics (ONS), in 2016 the average housing officer earned £21,000 – a rise of 2.2% on the previous year. That’s a cut in real terms, and that’s not good enough, says Gavin Edwards, national officer for the voluntary sector at Unison.

“Pay must be fair in housing associations, and that means the ratio between the top bosses and the rest of the staff shouldn’t be too high,” he says. “Annual pay increases need to reflect the cost of living and the contribution made by all staff across each organisation. This survey suggests that some housing associations are still a good way off getting that right.”

There has been external pressure on boards to keep a handle on chief executives’ pay, too. “Executive salaries are in the political and media spotlights as never before, and boards need to be aware of the risks that brings,” says James Tickell, partner at housing consultancy Campbell Tickell.

“This has to be balanced against the imperative to attract and retain top talent from diverse groups
and sectors, including the commercial. The best decisions will be based on detailed evidence, mixed with a good dose of common sense.”

There have been a few recent stirrings against the sector in the media. In January this year, Welsh Assembly Member Neil McEvoy – a member of Plaid Cymru – made the news when he referred to an Assembly report listing the salaries of Wales’ best-paid housing association chiefs. Above the list, Mr McEvoy had written: “And people think politicians get all the money!”

And in May last year The Sun published a vicious pop at housing associations, quoting a report co-authored by then-UKIP MP Douglas Carswell and UKIP’s health spokesperson Suzanne Evans that described housing associations as a “cartel”.

“These housing chief executives have become the new elite, enriching themselves… off the backs of the poor,” the paper reported Ms Evans as saying.

Clearly that’s not a view most people familiar with the sector would recognise. But its airing in the UK’s biggest-selling newspaper is perhaps symptomatic of a wider issue – how do these pay packets appear to an outside world still feeling the pinch after seven years of austerity?

“If you look at the media coverage [of housing chiefs’ pay], the Daily Mail has an occasional go,” says one recruitment expert who asked not to be named. “There are downward pressures on [chief executives’] salaries from public opinion and media interest.”

But, she adds, there are forces being brought to bear from the opposite direction, too: “There is an interest in hiring people from outside housing, so obviously salaries have to be sufficient to attract people from a wide range of backgrounds – development or finance, for example. It’s rather a confused picture overall.”

Bonuses

This year 59 housing associations awarded a bonus to their chief executives – four more than last year and 11 more than the year before. The average bonus awarded this year was £15,788.

There are significant outliers at both ends of the bonus table. At the top, as last year, is Places for People’s David Cowans, whose bonus of £188,365 was more than quadruple the next largest. A spokesperson says: “David consistently meets the demanding performance criteria
set by the board and delivered another strong set of results in the last financial year.”

At the other end of the scale are a clutch of chief executives who received far more modest bonuses. The 10 lowest bonuses last year averaged £554.

Notting Hill Housing’s chief executive, Kate Davies, received a £1,000 bonus – the same as the rest of its staff.

“We feel that having a set bonus for every employee, including the chief executive, helps to repay the value created by our staff as a whole,” says a spokesperson for Notting Hill. “It shows our staff that we are working together as one team.”

Trends

Overall there’s a mixed picture, but there seems to have been a slowdown in the frequency of raises last year.

In 2016/17, 94 chief executives were awarded a pay rise. In 2015/16, 119 directors saw their wages increase.

Meanwhile the number enjoying raises of more than 10% has plummeted from 17 in 2015/16 to five last year. Eighteen chief executives earned exactly the same total salary as the previous year, exactly twice as many as in the previous year.

The pay packets associated with the top job were cut at 18 housing associations in 2015/16; in 2016/17 that number jumped to 40, with an average decrease in total salary of 8% compared with 3.3% the previous year.

Many of the biggest pay cuts in 2016/17 correspond to a change of chief executive, however, as boards take the opportunity to curtail the highest wages. Of the top 10 biggest decreases in pay from 2015/16 to 2016/17, five correspond to the installation of a new chief executive.

“On the whole we have seen salaries of new appointments going down,” says one recruitment consultant. “That has been a significant change. There is now a greater sensitivity about top salaries.”

There is a corresponding correlation at the other end of the scale, too. Of those chief executives who received the highest raises last year, eight have been in post for seven years or longer and three have been in charge for more than two decades. “They’ve been around a long time; their salaries go up year-on-year because the board doesn’t want to offend them,” says one recruiter. “Some of them have got rather jammy little numbers going on.”

The best-paying housing associations this year are overwhelmingly English, while nine of the 10 less well-paid chief executives are based in the rest of the UK: two from Wales, one from Northern Ireland and six from Scotland.

This could be in part down to a different regulatory approach. The Scottish Housing Regulator, in contrast to the Homes and Communities Agency, published guidance five years ago on how to set senior pay, with a threat of regulatory action if boards offer excessive salaries. Julia Molloy of Scottish Borders is again the least well-paid of those surveyed, despite a pay rise last year of 5.8%.

Highest-paid chief executives

The highest-paid chief executives have been piling on the pounds again, but to a much lesser degree than last year. In 2016/17 the top 10 took home an average total salary of £331,887, an increase of 3% on the previous year. Last year, the average rose by 10%.

The top 10 average is almost exactly double the average total chief executive pay for the sector, which this year stands at £165,139.

Once again David Cowans, head of Places for People, leaves the rest in his wake – he earned a total of £579,183, more than £200,000 more than the next highest earner, Clarion’s chief executive Keith Exford. Mr Cowans’ salary rose by 10% on last year, a touch more than the 9.8% rise he had been awarded the previous year.

Mr Cowans’ salary might be an outlier – but then Places for People is not, as a spokesperson points out, your average social landlord. “The group’s operations span more than 20 companies operating across seven markets, including affordable housing,” the spokesperson says. “Our diverse business model has been essential in not only protecting our income streams during an era of austerity, but increasing them.

“Turnover grew by 29% [last year], profit before tax increased by more than 170%, housebuilding was up by 35% and we increased the number of homes under management by a further 30,000.”

A recruitment consultant, who does not wish to be named, says: “People tend to focus on the David Montagues and David Cowanses, but these are people running very substantial organisations and of course they get fairly high salaries – if you are running an organisation of that size then there’s a logic there. It’s the organisations in the middle bracket, medium to large, who are paid quite similar sums for running something a quarter of the size. They are the interesting ones… there are a number of people being paid far more than can reasonably be justified.”

Behind Mr Cowans is Mr Exford, chief executive of Clarion Group, which was formed from a merger of two already sizeable organisations: Affinity Sutton, where Mr Exford was chief executive, and Circle Group. Clarion was unable to respond to a request for a comment by the time this article went to press.

David Bennett of Sanctuary Group was last year’s third best-paid leader with a total salary of £356,277, a rise of 4.8% on his previous year’s pay.

“The group board believes David’s reward package remains commensurate with the high levels of performance under his leadership, and the size and complexity of the organisation which he leads,” says Jonathan Lander, chair of Sanctuary’s board. He also points out that Mr Bennett “played a key role” in Sanctuary’s recent acquisition of Embrace Care, an organisation that added 35 care homes to the group’s portfolio.

Not every top 10 earner saw an increase in their pay this year. Jane Ashcroft, chief executive of Anchor, was the sector’s second-highest earner last year, taking home just over £400,000. This year, Ms Ashcroft earned a total of £351,899 (making her still the highest-paid female chief executive by a margin of almost £90,000).

In fact, explains Pamela Chesters, chair of Anchor, Ms Ashcroft’s salary last year reflected a spurt in growth that was not replicated this year. “Anchor is a large and complex organisation, competing successfully with for-profit organisations in both care, now our largest income stream, and housing,” Ms Chesters explains.

“The past year has been one of consolidation following the prior year’s exceptional growth, driven principally by delivering two significant acquisitions which increased our care home provision by almost 2,000 units.”

Biggest rises

Chief executives’ salaries stayed the same in a very different picture from the last few years’ salary surveys.

Last year, basic and total salaries increased by 3.3% and 4.5% respectively.

The highest rise this year was 18.2%, awarded to Your Housing’s Brian Cronin. “As Your Housing Group has met a series of ambitious financial and customer-focused targets set by the board, our staff, including the chief executive, were awarded performance-related bonuses,” explains a spokesperson for the group.

Mr Cronin has enjoyed a chunky raise, certainly, but it still pales compared to last year’s top increase of 32.1%. This year’s top raises have been altogether more modest: the average top 10 rise in salary this year is 11.7%, compared with 18.1% last year.

One chief executive, Elizabeth Austerberry of 21,100-home Moat, has received a bonus of more than 9% for each of the past two years. Ms Austerberry received a 9.4% rise this year on top of a 12.9% last year; her total salary this year was £225,657, a jump of 23.8% on her 2014/15 total pay.

Steve White, chair of Moat’s remuneration committee, says: “This was the third year of a three-year staged pay award, which focuses on performance and appropriate alignment following an independent benchmarking exercise.

“The decision… reflects Moat’s strong performance over the past two years.”

Is the gender gap closing?

There has been another very slight improvement in the number of female housing association bosses this year. There are now 49 women in the sector’s top jobs – 27% of the total – compared with 47 last year and 45 the year before that. At this rate, gender parity should be achieved sometime around 2040.

There is better news elsewhere, however. There are now three women in the top 10 highest-paid positions, one more than last year, while the list of those who enjoyed the biggest raises is a 50/50 gender split. Last year just three of those spots were taken by women.

The gender pay gap has narrowed this year, too. The average total salary for female chief executives in 2016/17 was £162,344, a 4% rise on last year. The average total pay for their male counterparts was £170,009, a rise of just 1% on last year’s figure. The difference between male and female salaries this year is 5%, down from 7.2% last year.

That’s almost half the average 9.2% gender pay gap for full-time workers in the UK, according to the ONS (and as we pointed out last year, there are only 15 female chief executives among the 50 largest housing associations by turnover, which could explain the pay disparity to some degree).

“In the FTSE 250 there are 19% women at the top, so it’s good to see that the housing association sector is outperforming this statistic,” says Nicola Dibb, founder of networking group Women in Social Housing. “It’s encouraging that there is a narrowing of the difference in male and female salaries – it shows that housing organisations are taking a serious look at creating gender parity in the sector that will hopefully improve yet again next year and beyond.”

Methodology

Inside Housing sent salary survey questions to the 180 largest housing associations in the UK.

Organisations were given the opportunity to check the data before publication. In instances where a chief executive left a housing association during 2016/17, we included annualised figures for the outgoing chief executive.

Update: on 04.10.17 The salary of Ursula Bennion, chief executive of Trent & Dove, has been corrected to £128,550

Update: on 29.09.17 this article was updated to clarify the quote from Moat.