Reports

Report of the Council on the governance of the remuneration of the Vice-Chancellor and senior post-holders and other pay-related matters

The Council begs leave to report to the University as follows:

1. In this Report the Council proposes that it be granted authority to approve all pay-related matters concerning the Vice-Chancellor and certain other senior post-holders, to be set out in a new Special Ordinance. The opportunity is also being taken to consolidate in the same Special Ordinance the authority already granted to the Council for related matters and the Council’s commitments to publish information about those matters.

2. In June 2018, the Office for Students (OfS) welcomed the publication of the Higher Education Senior Staff Remuneration Code by the Committee of University Chairs (CUC). The Council agrees with the CUC, as noted in the introduction to its Code, that fair and appropriate remuneration is key to the success and development of the UK’s HE sector, operating as it does in an intensively competitive global environment.1 The Council also endorses the CUC’s view that fair and appropriate remuneration requires three elements: a fair, appropriate and justifiable level of remuneration; procedural fairness; and transparency and accountability. The proposals in this Report are aligned with the principles set out in the CUC’s Code. The OfS has since published its own guidance on preparing and publishing financial statements2 and the Financial Reporting Council has revised its Corporate Governance Code.3 The Reports and Financial Statements published with the Council’s Annual Report in December 2018 (Reporter, 6530, 2018–19, p. 179) already reflect these new requirements.

3. Under the existing Ordinances, the Council approves the stipends of certain named officers including the Vice‑Chancellor and the Pro-Vice-Chancellors, and also the stipends of officers in institutions for which it is the competent authority. This Report is seeking approval for the extension of that authority in relation to the Vice‑Chancellor and other named senior post-holders, to enable the Council to determine the total remuneration offered and to make decisions concerning incentive schemes and severance pay for those individuals.

4. Changes to Ordinances are also proposed to enable the following:

(a)the granting of authority to the Council to determine a policy for payments to external members of committees, when it is necessary to offer a financial incentive to secure the input of individuals who can provide the specific expertise and experience sought, in the manner of non-executive directors serving on commercial boards;

(b)confirmation of the commitments to publish annually staff statistical information, as approved by Grace 7 of 27 July 2005.

5. Most of the existing powers granted to the Council in relation to senior pay are exercised on its behalf by the Remuneration Committee of the Council.4 If the recommendations of this Report are approved, the Council would continue to delegate its authority to the Remuneration Committee under revised terms of reference, which are set out in in Appendix III. These revised terms of reference have been drafted to take account of the new guidance noted in paragraph 2. The membership of the Remuneration Committees of the Council and of the West and North West Cambridge Estates Board already align with the proposed membership as set out in new Special Ordinance C (ii) 2. The membership of the Investment Office Employment and Remuneration Committee will transition to a new membership which meets those criteria before the appointment of the new Chief Investment Officer.

6.The Council recommends:

I.That the new Special Ordinance set out in Appendix I be approved and the existing Special Ordinances C (ii)–(xiii) be renumbered accordingly.

II.If Recommendation I is approved, that the amendments to Ordinances set out in Appendix II be approved.

10 December 2018	Stephen Toope, Vice-Chancellor	Fiona Karet	John Shakeshaft
	Richard Anthony	Mark Lewisohn	Sara Weller
	Anthony Freeling	Jeremy Morris	Mark Wormald
	David Greenaway	Susan Oosthuizen	Jocelyn Wyburd
	Jennifer Hirst	Michael Proctor

Note of Dissent

We welcome aspects of this Report such as the publication of the Remuneration Committee’s Terms of Reference. However, the new Terms of Reference are not aligned with the third principle of the Higher Education Senior Staff Remuneration Code of the Committee of University Chairs, namely ‘transparency and accountability’ (see paragraph 2 of the Report).

Paragraph 6.3 of the new Terms of Reference stipulates that ‘no individual’s salary figures shall be stated other than when reporting to the Council the salary figures of the Vice-Chancellor and the Vice-Chancellor-Elect’. We believe that the Council has missed an important opportunity to improve transparency and accountability in relation to the total remuneration of the senior post-holders named in the Report. The changes to the Remuneration Committee should increase transparency rather than reducing it, and the practice used in the case of the Vice-Chancellor’s remuneration should be followed for other senior post-holders. At the very least, the remuneration of senior post-holders should continue to be disclosed to the Council (since delegation does not relieve Council of the responsibility for the decisions).

Indeed, on the basis that charities should be more transparent and accountable than quoted companies (which are required to publish detailed information about directors’ remuneration), consideration should be given to the publication of detailed information about senior post-holders’ remuneration.

Ross Anderson	R. Charles	Nicholas Gay	Marcel Llavero Pasquina
Evie Aspinall	Stephen J. Cowley	Nicholas Holmes	Sofia Ropek-Hewson

APPENDIX I

SPECIAL ORDINANCE C (ii):
Remuneration of the Vice-Chancellor and senior post-holders and other pay-related matters (Special Ordinance under Statute C II 1)

1. The Council shall have authority:

(a) to determine the remuneration and conditions of service, and to approve incentive schemes and the severance terms, of the Vice-Chancellor; and

(b) to determine the remuneration and conditions of service, and to approve incentive schemes and the severance terms, of senior post-holders;

where

(i)remuneration shall include stipend, payments additional to stipend that are related to the post including bonus and market payments, housing, and other benefits and allowances available to University officers; and

(ii)senior post-holders shall be the Pro-Vice-Chancellors, the Registrary, the Executive Director of Development and Alumni Relations, and the Director of Information Services as being those who report to the Vice-Chancellor, and such other post-holders as the Council may determine from time to time by Notice.1

2. The Council may delegate any part of its authority under Section 1(b) of this Special Ordinance to another body, provided that in relation to that body:

(a)a majority of the members, including the Chair, shall be external members;

(b)the Vice-Chancellor shall not be a member;

(c)the Council shall receive regular written reports of decisions made under that delegated authority.

3. The Council shall publish in the Reporter by Notice at least once a year such statistical and other information concerning remuneration as may be determined by Ordinance.

APPENDIX II

Regulations for Stipends (Statutes and Ordinances, p. 688):

By revising Regulation 5(a) to read as follows:

(a) The stipends of the Pro-Proctors, and Additional Pro-Proctors, the University Organist, and the University Marshal shall be determined by the Council.

Regulations for Payments Additional to Stipend (Statutes and Ordinances, p. 691):

By inserting the following new regulation after Regulation 12:

13. The Council shall publish in the Reporter at least once a year:

(a) an annual remuneration statement, which shall provide such information as the Council deems appropriate in order to be able to provide accurate and transparent information, taking into account such guidance as may be issued or adopted by the regulator from time to time;

(b)(i) anonymized statistical information about the number of non-clinical staff on each step of the single spine, for the institution as a whole and by School (or equivalent), according to staff category, grade, and gender; and

(ii)anonymized information by School (or equivalent), according to staff category, grade, and gender, of additional payments made under the regulations for payments additional to stipend (including market pay), but excluding payments for clinical responsibility.

New regulation

Payments for external members of committees

1. The Council shall have power to determine a policy for payments to external members of committees, as published from time to time in the Reporter, and to approve such payments.

2. The Council may delegate its authority under Regulation 1 to another body.

APPENDIX III

Remuneration Committee terms of reference