Annual Report of the Remuneration Committee 2020-21

Source: https://www.leeds.ac.uk/about/doc/annual-report-remuneration-committee-2020-21 Parent: https://www.leeds.ac.uk/structure-governance/doc/reports-accounts-policies

A. Introduction

The Remuneration Committee is a formal committee of the University Council.

This report outlines the responsibilities of the Committee, and its key activities and decisions during the year to 31 July 2021, in accordance with guidance provided by the Committee of University Chairs (CUC).

Remuneration Committee terms of reference

The Committee reviewed and updated its terms of reference during 2021. The Council is invited formally to approve the updated terms of reference, which are as follows:

• In the light of comparative information on salaries and other benefits and conditions of service in the sector, and taking into account the University’s interests and the public interest, to review annually and to determine the remuneration of the Vice-Chancellor and all other members of the University Executive Group.
• To receive appropriate information on additional external income accruing to the Vice-Chancellor and other members of the University Executive Group, and to consider the appropriateness of the policy on external income.
• To set the reward framework for senior post holders and to receive a report from the Professorial and Senior Staff Salary Review Committee.
• To note annually any salary increases which take a member of staff’s total remuneration package above £100,000, whether as an explicit retention decision or otherwise.
• To note annually recruitment involving total remuneration packages above £100,000.
• Taking into account both the University’s interests and the public interest, to advise the Council on any proposed severance settlement for the Vice-Chancellor;  to approve any proposed severance settlements for other members of the University Executive Group;  and to note severance settlements for other members of staff whose total remuneration package is over £100,000.
• To review annually the Gender Pay Gap and other available equality, diversity & inclusion analyses and to reflect how any issues might best be addressed in senior appointment and reward processes.
• To report annually to the Council. The annual report will comply with the requirements of the Office for Students accounts direction.
• To review its terms of reference annually.

The annual review of the Terms of Reference is to ensure that they remain appropriate and compliant with relevant legislation and guidelines, and that the focus of the Committee’s work has addressed these priorities.

Frequency

The Committee meets at least twice each year, and arranges additional meetings as appropriate and required.

Membership

The Committee consists of five lay members of Council. For the period of this report the membership was as follows:

• Chair: Liz Barber
• Pro-Chancellor: David Gray
• Lay nominees of Council: Ed Anderson, Helen Grantham, and Iain Moffatt

It is the responsibility of Council to ensure that the membership of the Committee has the necessary skills, experience and support to meet the Committee’s responsibilities.

The Chair of the Remuneration Committee is an independent member of the Council other than the Chair of Council.  The Committee can, if it so wishes, call upon external advisers as appropriate. The Vice-Chancellor, University Secretary and Director of Human Resources are not members of the Committee, but will attend as follows:

The Vice-Chancellor will attend for agenda items that relate to their role as line manager of Executive members, to enable the Committee to ensure full consideration of individual performance and organisational strategy when considering remuneration-related decisions. The Vice-Chancellor is not present for any matters that affect their own remuneration.

The University Secretary and Director of Human Resources will advise the Committee, but are not present for any matters that affect their own remuneration.

B. Operating Environment 2020-21

The new Vice Chancellor took up her post on 1 September 2020. In this reporting period, the strategy was confirmed for the period 2020-2030: Universal Values, Global Change. This includes three over-arching areas of Community, Culture and Impact, which is supported by an enabling strategy and an institutional approach to Equality, Diversity & Inclusion (EDI).

The on-going global COVID-19 pandemic that took hold in the UK in March 2020 has continued to have an impact, giving an unprecedented shock to the global economy, including the higher education sector. As well as continuing measures to protect the health, safety and wellbeing of all students and staff, the University has been focused on managing and mitigating the financial and other risks.

C. Principles and Approach to Senior Remuneration

The University of Leeds recognises the value of the CUC’s Higher Education Senior Staff Remuneration Code and the Committee seeks to ensure compliance with this Code. The Code is to be updated in 2021-22, and the committee will benchmark its practice against the new Code. (Postscript: The revised CUC Code was published in November 2021; no material issues arise for the University).

The Remuneration Committee has direct responsibility for determining remuneration-related matters for the Vice-Chancellor and all other members of the University Executive Group. These are executive posts that report directly to the Vice-Chancellor or the Deputy Vice-Chancellor, and for the period of this report consisted of the following individuals:

• Simone Buitendijk – Vice-Chancellor (from 1 September 2021)
• Professor Julia Bennell – Exec Dean: Leeds University Business School
• Professor Karen Birch – Exec Dean: Faculty of Biological Sciences
• Professor Andrew Dougill – Exec Dean: Faculty of Earth & Environment
• Francesca Fowler – Director of Human Resources (to 31 March 2021)
• Roger Gair – University Secretary
• Dennis Hopper – Interim Chief Operating Officer (from April 2021)
• Professor Peter Jimack – Interim Deputy Vice-Chancellor: Student Education (November 2020 to 31 July 2021)
• Professor Mark Kearney – Interim Exec Dean: Faculty of Medicine & Health (from 11 March 2021)
• Professor Nora De Leeuw – Exec Dean: Faculty of Engineering & Physical Sciences
• Jane Madeley – Chief Financial Officer
• Professor Neil Morris – Deputy Vice Chancellor: Digital Transformation (April to October 2021)
• Professor Alastair Mullis – Interim Exec Dean: Faculty of Education, Social Sciences and Law
• Tim Peakman – Chief Operating Officer (to 31 March 2021)
• Professor Nick Plant – Deputy Vice-Chancellor: Research & Innovation (from 1 August 2020)
• Ian Roberts – Chief Information and Digital Officer (to 31 December 2020)
• Professor Lisa Roberts – Deputy Vice-Chancellor: Research & Innovation (to 31 August 2020)
• Professor Paul Stewart – Exec Dean: Faculty of Medicine and Health (to March 2021)
• Professor Andrew Thorpe – Exec Dean: Faculty of Arts Humanities and Cultures
• Professor Tom Ward – Deputy Vice-Chancellor: Student Education (to November 2020)
• Professor Hai Sui Yu – the Deputy Vice-Chancellor (from September 2021; previously Deputy Vice-Chancellor: International)

In addition, the Committee receives updates on remuneration related matters affecting other groups of staff at the University of Leeds in order to enable it to fulfil its responsibility for ensuring that the organisation’s overall framework for remuneration is proportionate, appropriate, and enables the attraction and retention of talented individuals necessary to ensure the university meets its strategic ambition.

The University of Leeds is a large, complex and high profile institution requiring high performing, experienced leaders to continue its success and meet its strategic ambitions. When considering matters of remuneration, the Committee is required to balance many factors including market rates of compensation, the challenging financial circumstances facing universities, external perceptions of senior pay, and internal equity factors.

To assist in delivering this balance, the Committee considers data from a wide range of sources, including, but not limited to, data from relevant HE sector salary surveys (for both senior staff and vice-chancellors), benchmark data from external reward consultancies, regional data for comparable positions within relevant NHS and Local Authority organisations, and data available on national pay trends.

Salaries

When reviewing salary levels for both the Vice-Chancellor and University Executive Group, the Committee applies the principles outlined in the UEG Reward Framework Principles document. Except where individual contractual terms apply, the nationally negotiated pay award does not apply to the University Executive, although the Committee will consider the nationally negotiated cost of living award when undertaking its annual review. Careful consideration is given to any additional awards for exceptional performance using available external benchmark data and the average percentage cost of performance awards across the University’s wider population.

Salary determination at individual level takes account of:

• The UEG Reward Framework and Principles in place at the time
• Individual performance, competences and behaviours: as determined by the role expectations measured against individual personal objectives agreed with the Vice-Chancellor or in the case of the Vice-Chancellor, as determined by the Chair of Council in consultation with members of Council, including members of Remuneration Committee.
• Organisational performance & environment: university performance as determined against key internal and external indicators.
• Relevant market data on pay levels in comparable roles and organisations.
• Affordability: the budget available, in the context of the principles articulated above.
• Retention challenges: either at an individual role level, or across a particular professional or disciplinary field.

Bonuses

The University does not formally operate a bonus scheme for senior post holders.  In line with the approach taken with the wider university staff population, exceptional performance may result in the payment of a non-consolidated, non-pensionable recognition payment.

Pension

Senior post holders are eligible to participate in a pension scheme under the same conditions that apply to all University staff.  Following a policy decision taken by the Remuneration Committee in May 2014, it is not University policy to make cash payments in lieu of pension contributions. This position was confirmed following reconsideration by the Committee at its July 2019 meeting in the light of a UCEA sector survey on pension tax policies and again in March 2020. The matter is reviewed regularly.

Benefits

The University does not as a rule offer additional benefits such as private health cover, or car payments as a standard part of the remuneration offer.  Such benefits are occasionally considered on an individual case basis at the time of appointment, and are only agreed if it is deemed necessary to secure the appointment of the preferred candidate.

Consultancy and External Income

The University operates a Consultancy Policy that applies equally to all staff.  All senior post holders are obliged to declare any such income. The Remuneration Committee reviews any payments made and ensures compliance with the Consultancy Policy.

Expenses

There is a published University policy on Expenses for University Executive members.

D. Report on 2020-21

During 2020-21, the Committee had scheduled meetings in November 2020, March 2021 and July 2021 in order to carry out its responsibilities. In addition, members of the Committee were consulted on various changes in the Executive Team including both leavers and new appointments.

Standing Agenda Items

The Committee addressed the following standing agenda items:

• Reviewed and updated the Terms of Reference.
• Reviewed and noted the data on recruitment and salary increases involving salaries £100,000.
• Reviewed and noted any severance payments made to staff earning in excess of £100,000 since July 2020.
• Noted the data on external income accrued by members of UEG during the period 1 July 2020 to 30 June 2020 and reassured itself that any such income complied with the University’s Policy on External Income.
• The Committee reviewed the Gender Pay Gap figures and noted that a full report would not be prepared for this reporting period due to the impact of the pandemic on priorities and resources.

New Agenda Items

Internal Audit Report. Review of progress against and completion of all the recommendations and actions outlined in the PWC Internal Audit review of the university’s compliance with the Committee of University Chairs HE Senior Staff Remuneration Code, and the related Office for Students Accounts Direction.

University Executive Group Reward Framework and Principles. Completion and approval of the guidelines confirmed at its autumn 2020 meeting following development with independent input from external reward consultants Korn Ferry Hay.

Non-Disclosure Agreements. The Committee agreed that they should receive an annual update on any NDAs entered in to by the University, and that as a matter of course the Chair of the Committee should be advised of any such agreements at the point of action.

University Executive Team Changes. The Committee met on several occasions to receive updates on the progress pertaining to new appointments and to give due consideration to the formal terms relating to them.

COVID-19 Pandemic. The Committee was updated on the University’s continued use of the Governments Coronavirus Job Retention Scheme (often referred to as the Furlough Scheme) and of the decision to maintain the pay of affected staff during the initial round of furloughing at 100%.

Remuneration Matters Relating to Senior Post Holders and Vice-Chancellor

Given the seniority of the individuals within the coverage of the Remuneration Committee, overall institutional performance is particularly relevant to the consideration of reward. The Committee were mindful of the progress made by the University during the period 2020/21 under the backdrop of the COVID-19 pandemic and the launch of the new University 10-Year Strategy. Discussions relating to senior pay focused on the financial challenges that the University faces, the need for the Committee to maintain the motivation levels of senior staff against the backdrop of a potentially long running period of significant disruption and the reputational considerations. Following thorough discussion, it was agreed that, save in one case, the existing salary levels remained appropriate and competitive, and therefore that no annual award should be applied. Members of the UEG with a contractual entitlement to receive the nationally negotiated annual award would be asked to agree to a change in their contractual terms to remove this entitlement.

Performance

In line with usual practice the Vice Chancellor updated the Committee on the performance of each member of the UEG. In addition, the Pro Chancellor provided an overview of the Vice-Chancellor’s performance and leadership since her appointment.

Vice-Chancellor

The Committee reflected on the Vice-Chancellor’s performance since taking up post in September 2020 and considered feedback gathered by the Chair of Council from members of Council, the Vice-Chancellor’s direct reports, and some other members of the University community alongside the ambitious University Strategy. The Committee concluded that the Vice-Chancellor was performing at an extremely high level during a period of significant challenge for the HE sector. Taking into account the external environment, the CUC Higher Education Senior Staff Remuneration Code, and the policy for the remuneration of senior staff at the University of Leeds, the Remuneration Committee agreed that the Vice-Chancellor’s current remuneration package remained appropriate. No increase was therefore applied.

As required, the University has disclosed full details of the Vice-Chancellor’s remuneration in the Annual Accounts.  The 2019/20 data relates to the exiting Vice-Chancellor, Sir Alan Langlands, and the 2020/21 data covers one month when Sir Alan Langlands was in post, and eleven months with the current Vice-Chancellor, Simone Buitendijk, in office with effect from 1 September 2020:

External income: The Vice-Chancellor has received no external income during her tenure to date.

Expenses: The Vice-Chancellor complies with the University’s Expenses Policy, and information relating to her latest expenses claims can be found in the Governance section of the University website.

Pay ratios: The Office for Students requires universities to publish two key ratios to show the relationship of the remuneration of the Vice-Chancellor to that of staff within the institution. The methodology adopted is in line with paragraph 12 of the Office of Students Accounts Direction issued October 2019.

The figures for all staff are as follows:

In the interests of transparency, the University provides two further ratios to show the relationship of the remuneration of the Vice-Chancellor to that of employees within the university (a calculation that excludes individuals who are engaged on worker and/or agency contracts).

The figures for employees are as follows:

Other higher paid staff

In line with the Accounting Standards requirements, the University publishes basic salary of other higher paid staff (calculated on a full time basis). The data for 2018/19 is prepared in accordance with paragraph 12 of the Office for Students Accounts Direction issued October 2019.The requirements have been updated to include both basic salary and market supplements.\

January 2022