Release date: 25/01/2019
To support governing boards of academy trusts in setting a framework for the pay of their executive leader, NGA has produced new guidance. It builds on the ESFA’s Academies Financial Handbook 2018 which advises that “the board of trustees must ensure its decisions about levels of executive pay follow a robust evidence-based process and are reflective of the individual’s roles and responsibilities”.
Trustees have the direct responsibility of setting the pay of senior executive leaders (the principal of a single academy trust or the CEO of a multi academy trust). The NGA guidance presents a range of considerations that trustees can draw upon to help them set the framework for their trust and the remuneration package for the senior executive leader; the considerations should not be used in isolation. It comes as the latest report from the Public Accounts Committee this week questioned the ability of the ESFA to control executive pay in academy trusts, noting a series of “high profile scandals”.
Principles of ethics, public service and fairness should be the foundation of trustees’ decision, NGA’s guidance says. Trustees must be conscious that it is public money that they are spending and therefore that executive leadership roles cannot attract the same premiums as they would in the corporate sector. Those governing academy trusts should have a rigorous justification for their decision to ensure that it is accountable to stakeholders including parents and the taxpayer.
The Framework for Ethical Leadership in Education, also released today, will provide direction for executive pay decisions, with the guidance suggesting that trustees should consider if their policy ‘reflects that this is public service’ and whether ‘they are brave enough to take an evidence based and values -led decision.’
Whilst recognising that trustees will want to reward executives fairly, the guidance encourages governing boards to also consider the fairness of the decision on all staff at the trust, suggesting adopting a pay ratio as a way of ensuring this.
Emma Knights, chief executive of the National Governance Association said, “This is the first comprehensive guidance trustees have received to support their important responsibility of deciding the remuneration of their executive leader, and to help them assert their leadership of this matter. It is a complex and difficult decision, and those governing academy trusts need to balance rightly wanting to fairly reward their executive leader without doing so at the expense of their values and ethos. I want trustees to feel knowledgeable and assured in creating and sticking to their pay framework decision. Governing boards need to ultimately consider whether they will be able to justify their decision to stakeholders including parents and the taxpayer, and if they have robustly explored the ethics of their choice. If necessary, trustees need to have the confidence to say no, in the interests of pupils and the public.”
Sam Henson, director of policy and information at the National Governance Association said, “NGA have chosen not to recommend a ballpark figure or upper limit on executive remuneration given that all trusts have different contexts, challenges and needs. However, trustees must set a clear role, structure and purpose for their executive leadership along with a definitive pay framework which does not result in them paying a premium. One approach which may provide a check and balance for setting executive pay is an NHS style system where any trusts wishing to pay over a certain amount would have to gain special approval from the ESFA, and this is something we would like to see a debate on.”
Geoff Barton, General Secretary of the Association of School and College Leaders, said: “We welcome this thorough and helpful guidance for the trustees of academy trusts on the vexed issue of executive pay. The guidance recognises that trusts come in different shapes and sizes and that the level of pay for executive leaders will vary according to the degree of responsibility and challenge involved. It provides key questions that trustees need to consider in setting pay at a level which is demonstrably appropriate and provides good value for money. It will support confident decision-making which commands public confidence.”
Michael Pain, CEO of Forum Strategy, said: “The role of trustees is absolutely fundamental in ensuring accountability, sustainability and ethical practice across the academy trust sector. I welcome this new NGA guidance on executive pay because it is well-informed, accessible and built on cross-sector learning and the key legal considerations. This much-needed and thoughtful document will be of great help to trustees who must find the balance between rewarding their executives appropriately and ensuring public money is spent with utmost care. This is not an easy task, but it is essential!”
As the MAT governance experts, NGA support trustees with an extensive collection of guidance, insight and training on their responsibilities and best practice. All of our resources and recommendations are founded in our comprehensive evidence of what constitutes good governance in academy trusts, and include our Community MATs network, Welcome to a Multi Academy Trust induction guide and in-depth case studies. Join NGA as a MAT member to access all our resources and other member benefits including a weekly newsletter, Governing Matters and exclusive events.
Download the guidance here.