Skip to main content Skip to navigation

Remuneration Committee Annual Report

UNIVERSITY OF WARWICK

Annual Report of the Remuneration Committee 2020

1. Introduction

The Remuneration Committee (‘the Committee’) conducted its business during the academic year 2019/20 between 1 October 2019 and 30 September 2020, against a framework to consider senior pay at the University of Warwick. The Remuneration Framework (Appendix 1) was approved by the University Council at its November meeting in 2019 and made publicly available.

This report outlines the Committee’s approach and the decisions reached in relation to the Remuneration Framework during the 2019/20 academic year.

2. Remit and Membership

The Committee has responsibility for all matters relating to the remuneration of the Vice-Chancellor, Professor Stuart Croft, 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 Professional Services 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.

Membership

The Chair of the Council (Chair)

David Normington

The Treasurer

Keith Bedell-Pearce

Three independent members of the Council with expertise in leadership and/or senior remuneration in other sectors, appointed by the Council

Dr John Ferrie

Catharine French (to 9 May 2020)

Dr Deborah Keith

One independent member, external to the Council, with expertise in leadership and/or senior remuneration in other sectors, appointed by the Council

James Furse

The Chair of Council oversaw all meetings and discussions except those relating to the Vice-Chancellor’s performance review and reward and strategic objectives, in this instance, Dr Deborah Keith assumed the Chair. The members, as outlined above, were in attendance for the review period with the Secretary to Council as the Committee Secretary.

The Remuneration Committee meetings are also attended by the University’s HR Director, HR Strategy Director and the HR Reward Manager, who provide information and analysis. The Vice-Chancellor is in attendance when requested by the Chair; this excludes meetings or agenda items where discussions and decisions are made where there would be personal implications.

The Committee held two meetings during 2019/20 – November 2019 and September 2020. The February 2020 meeting was conducted by email circulation and the meetings for May and July 2020 were cancelled as a result of the Covid-19 pandemic, but the members of the Committee were kept available should a need have arisen to convene remotely.

3. Terms of Reference

For 2019/20 the terms of reference were as follows:

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

(b) 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, and those other members of senior staff who are involved in setting and moderating the pay for senior staff, in line with the terms of the remuneration policy framework approved by the Council, and not exceeding the delegated authority therein.

(c) To determine the level of severance pay to be awarded to those members 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, in line with the terms of the remuneration policy framework approved by the Council, and not exceeding the delegated authority therein.

(d) To refer to the Council any matters in relation to remuneration or severance pay that do not fall within the approved remuneration policy framework or the delegated authority of the Committee.

(e) 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.

(f) To approve annually the operating framework within which the Vice-Chancellor shall exercise their authority to determine senior remuneration.

(g) To receive an annual report from the Vice-Chancellor on the work of the University Executive Board on Remuneration.

(i) To receive an annual report from the Vice Chancellor on the framework for succession planning.

4. Remuneration Framework

A copy of the Remuneration Framework, within which the Committee has operated for the past year, is available here. The Framework was designed to ensure that the University is able to sustain its place in a highly competitive environment and is in the best place to be able to recruit and retain talented senior staff, capable of delivering its strategic goals and to deliver exceptionally high performance against national and international benchmarks. The University is a large research-intensive institution; in many aspects of the University’s work it needs to remain competitive with institutions in, for example, the US, Canada and Australia, where the salaries offered to academic leaders are considerably higher than in the UK.

The Remuneration Framework makes reference to the National Pay framework applied to remuneration more widely in the University. Salaries for staff in jobs other than Professorial/Senior Professional Services roles are subject to national negotiation and are linked to the higher education pay spine. All roles are evaluated using Hay/Korn Ferry methodology as the basis for determining job size.

The two determinants of remuneration for the Remuneration Committee population are job size and individual performance. The Remuneration Framework articulates the overall objectives for remuneration in relation to institutional performance. Individual objectives and priorities for the Vice-Chancellor are agreed annually with the Chair of Council. For the remaining Remuneration Committee population, objectives reflect the focus for individual roles alongside the institutional priorities.

Notably, the Remuneration Framework ensures that any performance-related pay takes the form of a non-consolidated cash payment. The move to non-consolidated cash payments was introduced by the Remuneration Committee in 2018 for the 2017/18 review period and changes to base pay are made in exceptional circumstances and only when there is misalignment with median pay for a particular role externally.

Staff whose roles were linked to the national pay spine would normally receive incremental awards (generally equivalent to circa 3% of base pay) until they have reached the top of the range relevant to their role. Staff demonstrating exceptional performance would also be eligible for a merit award. Professorial and Senior Professional Services staff in the top pay band would normally have had the opportunity to be considered for performance-related pay progression. However, in the light of the financial constraints following the onset of the Covid-19 pandemic, and in line with the cessation of all merit pay for 2019/20, no member of the senior team has received a performance pay rise or bonus.

5. National Pay Award

There is no contractual entitlement for the population covered by the Remuneration Committee to receive the general pay uplift negotiated annually between Higher Education employers and the Trades Unions. When such an agreement is reached, the Remuneration Committee considers whether or not to apply the general uplift to the salaries of the population covered by the Remuneration Committee.

Within the period covered by this report, owing to the unprecedented disruption caused by the Covid-19 pandemic, the Universities and Colleges Employers' Association (UCEA) and the five HE trade unions (EIS, GMB, UCU, UNISON and Unite) agreed to pause the start of the negotiations. Consequently, the entire Remuneration Committee population, in line with all other staff in the University, did not receive any increase to base pay. National bargaining through UCEA is expected to resume for 2021/22.

The University is committed to paying the Real Living Wage rate, which is higher than the National Living Wage rate, to any member of staff whose pay for the financial year falls short of that recommended by the Living Wage Foundation. This was applied on 1 April 2020.

6. External perspectives received by the Committee

During the year the Remuneration Committee received input from both the Council of University Chairs (CUC) and the Office for Students through the form of reports and circulars, as well as benchmark pay information relevant to the roles within its remit. Independent external pay benchmarking was achieved using external sources including the CUC Vice-Chancellor Salary Survey, the Russell Group, the Universities and Colleges Employers Association (UCEA) Senior Staff Remuneration Survey and independent analyses provided by Hay/Korn Ferry. The Committee considered externally sourced information as well as internal analysis of pay relativities, including gender pay.

This external perspective provides assurance that remuneration for key senior roles is in line with the market median for comparable institutions.

7. Performance Pay

As noted earlier, in the light of the financial constraints following the onset of the Covid-19 pandemic, no member of the senior team has received a performance pay rise or bonus.

The University operates a merit pay system for staff on the national pay scales where individual performance goes beyond the basic requirements of the role. The Merit Pay Scheme was paused for 2019/20 and will be paused for 2020/21.

Professors and Senior Professional Services staff within the top pay band are eligible to take part in a Senior Performance and Remuneration scheme where awards are made on the basis of individual achievements around education, research, leadership and other relevant metrics. The Senior Professional Remuneration Review was paused for 2019/20 and will be paused for 2020/21.

8. Remuneration of the Vice-Chancellor

The Committee reviewed the performance of the Vice-Chancellor, Professor Croft, against a broad range of objectives agreed by the Chair of Council.

The Vice-Chancellor’s long term objective is to deliver the University’s 2030 Strategy, Excellence with Purpose. Overall progress towards the delivery of that Strategy is assessed each year but in 2019/20 there were also specific objectives relating to: communicating the strategy; developing a new campus masterplan and transport strategy; progressing international partnerships; preparing for the Research Excellence Framework (REF); enhancing the student experience; embedding the University’s values and new student disciplinary framework; developing a long term financial strategy to support new investments, and tackling a number of key leadership issues, including particularly securing new leadership for Warwick Manufacturing Group (WMG).

There had been excellent progress in meeting most of these objectives, but this was overshadowed in the final five months of the performance year by the onset of the Covid-19 pandemic. The Remuneration Committee agreed with the view of the Chair and Council members that the response of the Vice-Chancellor and his team had been exemplary. The University had moved very fast to set up a crisis response team, which, with the support of a specially constituted Council sub group, had acted quickly to secure the campus, look after the wellbeing of students and staff, move all teaching and assessment online and safeguard the University’s financial position. The Vice-Chancellor himself had set a clear and effective course from the outset, communicated well and shown exceptional and resilient leadership. The strength of the leadership response across the University was a measure of how successfully the leadership team has been developed over the past three years.

During the review of performance, the Chair and Vice-Chancellor had identified a number of priorities for 2020/21. These included getting the University Strategy and finances back on track, including: further progress on the STEM grand challenge; inclusion; sustainability; finalising strategic KPIs; enhancing the student experience post Covid-19, and delivering a successful REF. However, much of the year is likely to be dominated by tackling the continuing Covid-19 crisis and balancing the leadership of the University through the crisis with the need to keep an eye on the longer term will be a particular challenge.

In comparison to the Russell Group Universities, using January 2020 data per the 2020 survey of Vice-Chancellor's Remuneration conducted by the Committee of University Chairs (CUC), the University of Warwick’s Vice-Chancellor and President’s base salary is positioned between the median and the mean. This reflects the top 10 league table position and the scale of the University’s operations, with total annual turnover of £680 million.

On the basis of his performance this year, the Remuneration Committee judged that, if this had been a normal year, the Vice-Chancellor would have been eligible for a significant bonus. However, he had already made it clear, in advance, that, as in previous years, he did not wish to receive a performance bonus; and in fact, in the light of the financial constraints following the onset of the pandemic, no member of the senior team has received a performance pay rise or bonus.

Vice-Chancellor Remuneration
  1 August 2020 1 August 2019
Salary

£308,502

£308,502

Performance Related Pay

£0*

£0*

Taxable Benefits

£21,500

£21,500

Subtotal

 

 

Pension Costs

£40,105

£40,105

Total

£370,107

*Waived

£370,107

*Waived

9. Pay relativities

For some time, the Committee’s Remuneration Framework has made explicit reference to proportionality and the guidance from the Office for Students (OfS) Accounts Direction requires the calculation of the pay multiple. The pay multiple must be expressed as the full-time equivalent Vice-Chancellors’ remuneration divided by the median pay of all employees at the institution (also calculated on a full-time equivalent basis).

Relativity to Median Salary 31-Jul-18

31-Jul-19

31-Jul-20

Ratio Vice Chancellor to all Staff (Base Salary) 8.9

8.9

8.9
Ratio Vice Chancellor to all Staff (Total Remuneration) 9.1 9.1  8.7
Ratio Vice Chancellor to Academic staff (Base Salary) 6.4 6.2 6.2
Ratio Vice Chancellor to Academic staff (Total Remuneration) 6.4 6.4 6.3

The Remuneration Committee noted the expectation that the ratio of median staff pay to that of the Vice-Chancellor’s should be less than 1:8.5, but considered the differences of workforce structure which contribute to variations in this measure. Unlike many institutions, the University of Warwick has made a considered decision not to outsource any of its support services or activities and this, together with a proportionately greater number of staff employed in commercial operations, distorts this measure of pay relativity. Table 2 above includes the relationship between the Vice-Chancellor’s pay and the median for the academic workforce which is perhaps a more meaningful comparator with similar institutions.

10. Equality considerations

There were no instances within the Remuneration Committee population where there was a gender-related difference in salary for roles of the same type. The Remuneration Committee reviewed the approach adopted by the University to ensuring equal pay across the senior population of Academic Staff and Professional Services Staff, as well as receiving gender pay data for the University as a whole. The University published a full gender pay report in March 2020. In March 2020, the University chose to publish ethnicity and disability pay gaps in addition to the gender pay gap.

11. Severance arrangements

During the period covered by the report, the Remuneration Committee was asked to consider two severance payments for staff with salaries over £100k. The cases were reviewed and approved by the Committee. One of these Severance cases was as a result of the Voluntary Leaver Scheme (VLS) which the University ran between 9 June 2020 and 18 September 2020.

12. External appointments and expenses

Professor Croft’s contract allows him to take external appointments with the permission of the Chair of Council. There is no contractual restriction on retention of external income but Professor Croft has chosen not to take any paid appointments.

His current external Board appointments are as follows:

  • Coventry and Warwickshire Local Enterprise Partnership (Board member)
  • Universities West Midlands (Board member)
  • Midlands Innovation Board (Board Member)
  • Lord Bhattacharyya Family Trust Fund (Director)*
  • Russell Group of Universities (Board member)
  • Universities UK (Board member)
  • The Guild of European Research-Intensive Universities (Board member)
  • Eutopia (Board member)

*Note this is an endowment within the University and specifies the Vice-Chancellor as a trustee.

Sir David Normington
Chair of Council
University of Warwick
October 2020