Chief executive pay rises 3.1 per cent in 2014/15

Average pay for housing association chief executives increased by 3.1 per cent in 2014/15.

The accounts of 221 UK social landlords show the average chief executive pay package –including bonuses, performance-related pay and benefits in kind but excluding employer’s pension contributions – was £147, 963.

Pay per unit rose 1.7 per cent having been almost flat the previous year.

Pay rose faster than the number of units but slower than turnover growth in all regions of the UK except Northern Ireland where pay fell.

Compensation payments to departing executives and directors rose 71 per cent to £4.4m.

13 of the 221 chief executives saw their pay fall. However some of these drops were for exceptional reasons, such as one-off payments made the previous year.

This report includes pay per unit except where there is a significant proportion of non-social housing activity. It considers the associations with the highest paid chief executives.

England

Average pay increases for chief executives of the 166 associations analysed in England were 0.1 percentage points ahead of the UK average at 3.2 per cent. The rise is ahead of the growth in unit numbers (1.4 per cent) but behind increase in turnover (8.2 per cent). Consequently pay per unit rose 1.8 per cent.

The 2013/14 was the final year of the Affordable Housing Programme for development, which meant that growth in the number of units was lower in 2014/15 (3.7 compared with 1.4 per cent).

Mixed businesses

In our survey mixed businesses have a range of business types in the organisation and may have LSVT subsidiaries. Their income may be mostly from social and affordable rent but may include large-scale development programmes of shared ownership and/or market sale. All the key developing housing associations are in this category.

Mixed business saw the largest rise in turnover at 10.4 per cent but lower rises in pay and pay per unit compared to LSVTs and traditional associations.

David Cowans, chief executive of Places for People, remains the highest paid chief executive in the sector. He is fourth lowest – having been lowest last year – of the heads of mixed businesses measured in pay per unit. This slight change is probably linked to a 2.2 per cent fall in the number of units held by the association and an 11 per cent pay rise. His pay remains at 0.09 per cent of the group’s turnover, which rose 13.4 per cent in the year.

Chris Phillips, chairman of Places for People, said more than half of the group’s turnover came from outside social housing and its work includes care and support, maintenance, construction, financial services, facilities management and leisure services.

He said: “As a result of David’s leadership and passion for innovation, the group has been able to implement the board’s strategy to generate significant investment for new homes and local communities. He consistently meets the board’s annual and long term performance criteria covering financial, social involvement, value for money, environmental and place building targets.

“Generating revenue and financial surpluses will ensure the group can make future investment in affordable housing and David’s leadership helps drive our vision of ensuring the long-term sustainability of places and communities.”

Traditionals

In our survey, traditional housing associations are those where income is mostly from social and affordable rent, including care and support and housing for older people.

Anchor’s chief executive Jane Ashcroft had the second-highest pay package across all association types at £417,078.

Anchor’s chair Pamela Chesters said: “Almost half our turnover in 2015/16 came from our care home business. It is likely to be far higher this year following the acquisition of 29 care homes in September 2015. We are also developing new models of housing and care for a private market, which together provide 645 additional market rate homes, including care home rooms.

“Anchor is a large, growing and complex organisation working across a number of different sectors and competing successfully with commercial care providers. Remuneration has been set at a level which allows us to attract and retain staff from competitors. Our services include specialist residential and dementia care as well as housing to buy and rent at 1,000 locations across England.

“In 2014/15 we delivered a significant efficiency programme which has allowed us to reduce overhead costs by £12m and to increase our investment into front line services.”

Pierhead Housing Association in Liverpool had the highest pay per unit at £81.18 although this was a fall of 6.7 per cent and chief executive’s pay fell 6.9 per cent but its turnover rose 3.5 per cent. The association declined to comment on the figures.

The chief executive’s salary as a percentage of turnover tends to be highest amongst the organisations with the lower turnovers which could suggest boards believe there is a pay floor below which they cannot hire a chief executive regardless of the organisation’s revenue.

LSVTs

As last year, chief executives at LSVTs saw the highest rise in average emoluments, which were up 3.7 pc to £156,800.

Emoluments per unit were up 2.6 per cent, which is more than double the percentage rise in traditional and mixed groups.

Units rose 1.1 per cent while turnover grew by 5.9 per cent.

Gentoo’s Peter Walls remained the highest paid LSVT chief executive but is in the bottom three English LSVT chief executives by emoluments per unit.. He stood down as chief executive of Gentoo in September but will continue to carry out community roles until he leaves in April 2016. The association declined to comment further.

Compensation

Compensation paid to outgoing executives rose sharply from £2.6m to £4.4m. The figures do not include compensation payments that were not separated from total emoluments in housing associations’ accounts. Some payments were made under contractual arrangements.

The biggest payment was a total of £290,000 paid by Choice Housing in Northern Ireland to two directors for redundancies following a merger. One was Arthur Canning, the former chief executive of Trinity Housing which merged with Oaklee Homes Group in June 2014.

Scotland

Average chief executive pay rose by 1 per cent in Scotland while turnover rose 4.7 per cent and unit numbers by 0.7 per cent.

Traditional associations gave their chief executives no pay rise, on average, whereas LSVT leaders enjoyed a 3.4 per cent increase.

Port of Leith’s Keith Anderson had the highest percentage pay rise of the Scottish chief executives surveyed at 13.5 per cent. A spokeswoman for the association said the remuneration package was set by the board and the association would not comment further.

At the five LSVTs in the survey, the average pay rise was well below the 8.1 per cent they got last year.

Wales

Welsh chief executives enjoyed the highest percentage pay rise in the UK at 5 per cent compared to last year’s 3.7 per cent increase. Wales matched England’s 1.4 per cent increase in the number of units, ahead of the principality’s 0.8 per cent rise last year .

Michael Williams, chief executive of Gwalia, remained the highest paid housing association leader in Wales.

Northern Ireland

Northern Ireland was the only part of the UK to see a fall in average pay with a 1.1 per cent drop. At the same time, unit numbers and turnover rose amongst the five associations surveyed, which led to a 6.4 per cent fall in emoluments per unit.

This year’s figures are a big change from the previous year’s survey when pay rose 7.2 per cent although there were also strong rises in units and turnover that year.

Northern Ireland’s highest paid chief executive was Ian Elliott at Choice Housing, but his package was 12 per cent down on last year because of an exceptional performance related payment in 2013/14 which stopped the following year. He no longer works at the association.

Agency and other

The Housing Finance Corporation did not supply pay information for last year’s highest earner Piers Williamson. Most of the social housing agencies and trade bodies did not include precise pay figures for their chief executives in their annual reports.

The chief executives of some of the volume housebuilders earn more than any of these agency leaders – for example Barratt’s David Thomas made £4.2m in 2014/15 and Persimmon’s Jeff Fairburn had a package worth £1.9m in 2013/14 - but they had turnovers of £3.8bn and £2.6bn respectively so their salaries accounted for 0.11 per cent and 0.07 per cent of their firms’ turnovers. The biggest mixed-business housing associations have similar figures for pay as a percentage of turnover.