Decision

Charity regulator criticises international charity over CEO pay decision

Published 20 December 2019

This decision was withdrawn on 18 January 2022

This report has been archived as it is over 2 years old.

The Charity Commission has criticised Marie Stopes International for the way in which its trustees decided on the latest pay package awarded to the charity’s chief executive.

The regulator examined the charity’s decision making after concerns were raised about the amount and structure of the CEO’s remuneration package for 2018, which amounted to £434,000, and included a significant bonus payment. The purpose of the Commission’s examination was to determine whether the trustees acted in line with their duties and responsibilities in the way they made the decision about the remuneration package.

The charity’s trustees accept that the written documentation around the decisions on the CEO’s pay package is inadequate and it is therefore not clear how the principles they were supposed to follow in setting this package were applied in practice. The charity has not been able to provide the Commission with evidence that a proper and robust discussion took place either at full board or at the charity’s remuneration committee about the appropriate level of pay to be awarded to the CEO. Nor could the trustees show that they had taken into account all the relevant factors, as required by the Commission’s guidance. The trustees have told the Commission that a robust discussion did take place, but was not properly noted or minuted.

The trustees have been issued with formal advice under section 15(2) of the Charities Act 2011, requiring them to “review the factors it takes into account when making decisions about the CEO’s remuneration”. The trustees have also been directed to ensure that all their decisions are adequately recorded so that the factors taken into account are clearly set out, as well as the final decision.

Helen Stephenson, Chief Executive of the Charity Commission, said:

We understand why the public care about how charities pay their staff and why this undermines the reputation of charities as a whole. It’s because issues like CEO pay help the public see how a charity is stewarding its resources, and whether it is behaving in an authentically charitable way, distinct from the attitudes that might prevail in a commercial organisation.

We are not a regulator or controller of executive pay. But we expect decisions of this nature to be made carefully, mindfully, and in a way that ultimately serves the charity’s beneficiaries into the future and demonstrates their special status as a charity.

Ends

Background information

• Ultimately the decision on how much to pay a charity’s CEO is for trustees to make. The Commission cannot dictate to charities how much they should pay their staff.
• However, charity law sets out the duties and responsibilities of charity trustees. These include principles that must be followed when making decisions on behalf of their charities. Those principles are reflected in our published guidance: The Essential Trustee, and It’s Your Decision.
• The Commission’s compliance case into Marie Stopes International (registered charity number 265543) opened on 19 August 2019 date and concluded today, 20 December 2019. Since last year, 2018, we have been requiring charities to tell us exactly how much their highest paid staff member receives.
• We are now using that data to make a study of pay in charities. When that work is complete, we will publish our findings next year.
• This information required of charities helps the Commission to evaluate how the sector and individual organisations use funding and whether that is compatible with the legal requirements that private benefit must only be necessary and incidental and that charities manage their resources responsibly.

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