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Remuneration Committee Annual Report


Annual Report of the Remuneration Committee 2017

1. Introduction

The Remuneration Committee (Remco) conducted its business during 2016/17 against a framework for considerations of senior pay at the University of Warwick which was approved at a full meeting of the University’s Council in spring 2017, following which it was placed in the public domain.

This report outlines the Committee’s approach and the decisions reached in relation to that framework during the year and was approved at a meeting of the University’s Council held on 22 November 2017.

2. Remit

The Committee has responsibility for all matters relating to the remuneration of the executive team and a number of other key senior roles. In addition, the Committee reviews the University’s approach to the management of pay for those who fall outside the national framework for pay bargaining in higher education (Professors and Senior Administrative staff). The Committee receives reports on the number of staff whose pay exceeds £100,000 and approves any payment made on the departure from the University of a member of staff earning more than £100,000.

The membership for the academic year has been as follows:

The Chair of Council (Chair) Sir George Cox  
The Vice-Chancellor and President Prof Stuart Croft*
The Treasurer Mr Keith Bedell-Pearce  
Three additional independent members of Council Dr Neil Bentley  
  Sir David Normington**  
  Ms Kamini Gadhok***  

*Present only when meetings covered remuneration other than their own

** Chair with effect from July 2017

*** With effect from February 2017

3. Terms of Reference

For 2016/17 the precise terms of reference were as follows:

(i) To propose to the Council the remuneration policy framework within which the Committee shall exercise delegated authority on behalf of the Council;

(ii) To determine and review the remuneration packages of the Vice-Chancellor and President, members of the senior management team who report either to the Vice-Chancellor or to the Provost and those other senior members of staff who are involved in setting and moderating the pay for senior staff, in line with the terms of the policy framework previously agreed by Council and the associated delegated authority;

(iii) To determine the level of severance pay to be awarded to any member of staff whose salary exceeds £100,000 and all those senior members of University staff whose remuneration packages are determined and reviewed by the Committee;

(iv) To refer to the Council any matter in relation to remuneration or severance pay that did not fall within the approved policy framework;

(v) To report annually to the Council on the work of the Committee, including decisions taken under delegated authority, and to propose any amendments to the remuneration policy framework;

(vi) To approve annually the operating framework within which the Vice-Chancellor shall exercise his authority to determine senior remuneration for Professors and other senior staff;

(vii) To receive an annual report from the Vice-Chancellor on the work of the Vice-Chancellor’s advisory group on remuneration elsewhere in the University.

4. Remuneration Framework

A copy of the policy framework is provided at the end of this report.

The Committee held four meetings during 2016/17 – in November 2016, February 2017 and two meetings in July 2017. One of the July meetings was devoted to a consideration by the Committee of the performance of the Vice-Chancellor in the period January 2016 to June 2017 against objectives agreed through discussion with the Chair of Council. The Vice-Chancellor was absent from this meeting but attended a second meeting at which the performance and reward of other senior staff covered by Remco was considered and agreed.

5. National Pay Award

There is no contractual entitlement for the population covered by Remco to receive the general pay uplift negotiated annually between Higher Education employers and the Trades Unions. On each occasion such an agreement is reached Remco considers whether or not to apply the general uplift to Remco salaries. Within the period covered by this report, Remco twice considered whether or not to enact the national award and on both occasions elected to apply the award (for the 2016/17 and 2017/18 academic years) As a consequence the entire Remco population received an increase of 1.1% to base pay with effect from 1 August 2016 and an increase of 1.7% from 1 August 2017, in line with all other staff in the University. This is separate to the market and performance considerations outlined below.

6. External perspectives received by the Committee

During the year the Committee received input from both the Council of University Chairs (CUC) and HEFCE through the form of reports and circulars, as well as benchmark pay information relevant to the roles within its remit from external sources including CUC, the Russell Group, the Universities and Colleges Employers Association (UCEA) and the Hay Group.

7. Remuneration of the Vice-Chancellor

The Committee reviewed the performance of the Vice-Chancellor against a broad range of objectives agreed by the outgoing Chair of Council. These objectives covered, inter alia, the performance of the University in research, teaching, external engagement, strategic development and financial sustainability. The review period was for eighteen months – January 2016 to June 2017 – mirroring the approach being taken by the University. Remuneration is normally reviewed annually but on this occasion the period was extended to facilitate the alignment of the financial and academic years with performance reviews.

In addition to an assessment of performance the Committee reviewed external benchmarks for the Vice-Chancellor’s pay. On appointment, the Vice-Chancellor’s remuneration was set at a level broadly equivalent to the median for the Russell Group. In examining the Vice-Chancellor’s achievements over the eighteen-month review period the Committee concluded that there had been excellent progress on a number of dimensions. Using the same parameters as those applied for the senior population as a whole, the Committee decided to award a performance-related increase in base pay of 3.2%, in addition to the national uplift applied to the Remco population as a whole. This generated a revised salary of £297,105 with effect from 1 November 2017, placing the Vice-Chancellor marginally above the Russell Group median but just below the median benchmark for Russell Group institutions with turnover of £400m or more.

The Committee took account of the high level of public interest in University senior pay, as well as of refreshed HEFCE guidance, in making this recommendation. The Committee’s pay framework (overleaf) makes explicit reference to proportionality, stating an objective that the Vice-Chancellor’s pay should be no more than twenty times that of the lowest paid employee (a key recommendation of the Hutton report on fair pay). After application of the Remco’s recommendation the ratio stands at 1:18.5, well within this guideline.

8. Remuneration of other senior staff covered by Remco

The Committee received performance reviews for the population within its remit, rated using the same approach as that adopted for Professors and Senior Administrative staff across the University. It also received all relevant salary benchmarking information. Looking at these in tandem, individuals received an increase in base pay of between 1.6% and 4.5% so long as performance was rated higher than “satisfactory”. If implementation of such an award would have created a salary out of line with external comparators this was converted into a one-off cash lump sum. These calculations for performance related pay were adjusted to take account of the fact that this was an eighteen-month review period rather than the customary annual review.

9. Equality considerations

There were no instances within the Remco population where there was a gender-related difference in salary for roles of the same type. Remco reviewed the approach adopted by the University to ensuring equal pay across the senior population of professors and senior administrators, as well as receiving gender pay data for the University as a whole. The University will publish a full gender pay report in February 2018.

10. Severance arrangements

During the period covered by the report Remco was not asked to consider any such arrangement.

Sir David Normington
Chair of Council
University of Warwick
November 2017