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4. CHIEF EXECUTIVES: ANNUAL INCREASE 2009-10
What is the annual increase for Chief Executives on spot rates?
4.1 For Chief Executives on spot rates of remuneration (and subject to obtaining the appropriate Scottish Government approval) -
- A public body may propose an increase in the remuneration of a Chief Executive on a spot rate of up to 1.50% (the Basic Award). This increase is limited to the ceiling of the relevant Pay Band within the Scottish Chief Executive Pay Framework.
- This is subject to confirmation of satisfactory performance from the Chair / Board.
What is the annual increase for Chief Executives on pay ranges?
4.2 For Chief Executives on pay ranges (and subject to obtaining the appropriate Scottish Government approval) -
- A public body may propose an increase in total of up to 3.00% (the Total Award Limit) this includes:
- an increase in the minimum and maximum of a Chief Executive's pay range of up to 1.50% (the Basic Award). This increase is limited to the ceiling of the relevant Pay Band within the Scottish Chief Executive Pay Framework; and
- a progression increase, limited to the maximum of the pay range.
4.3 This means that -
- if the intended progression increase is 2.50%, then the Basic Award must be constrained to 0.50%;
- a maximum Basic Award of 1.50% can only be awarded where progression is limited to 1.50%.
4.4 This is subject to confirmation of satisfactory performance from the Chair / Board.
What are the arrangements for Chief Executives remunerated near, at or above the ceiling?
4.5 The ceilings in the Scottish Chief Executive Pay Framework have been increased, which means there should be sufficient headroom for Chief Executives remunerated near or at the ceiling to receive up to the full Basic Award. Any pay range maximum remains limited to the ceiling of the relevant Pay Band in the Scottish Chief Executive Pay Framework. Unlike last year, there is no provision for making non-consolidated payments up to the level of the Basic Award to make up for pay ranges constrained by the ceiling.
4.6 Where Ministers have exceptionally agreed salaries and pay ranges for Chief Executives above the ceilings in the Scottish Chief Executive Pay Framework, proposals seeking approval for consolidated increases in line with pay policy parameters may be made to the Scottish Government Remuneration Group.
When do the increases apply?
4.7 Public bodies may backdate any increases to the usual settlement date (1 April 2009 or later).
What are the arrangements for bonuses (non-consolidated performance payments)?
4.8 Bonuses (non-consolidated performance payments) are only one element of the remuneration package and therefore must be considered alongside all other aspects (pay increase, change in non-salary rewards, etc.) at the same time as approval is being sought. A bonus reflects performance in the previous year and so can only become due after the end of that performance year.
4.9 In submitting proposals that include a bonus, the Chair must provide a statement that:
- confirms the Chief Executive's performance has been assessed;
- confirms that this assessment shows 'exceptional' performance in one or more ways in the performance year;
- states the proposed level of bonus in monetary and percentage terms; and
- sets out the objective method by which the percentage level of bonus has been determined.
4.10 Under this approach, the Chair would need to be satisfied that the 'exceptional' performance (as described in paragraphs 3.27 to 3.37) justifies the percentage bonus and be prepared to defend it.
4.11 The Scottish Government Sponsor Director must confirm they support the percentage bonus level being proposed and the justification for it in order for the bonus to be approved. The Scottish Government Sponsor Director will therefore consider the proposed bonus and the Chair's supporting statement and may seek to discuss it with the Chair. Ongoing dialogue throughout the year with the Chair on the Chief Executive's performance will assist the Sponsor Director in supporting any bonus proposal for exceptional performance at the end of the year.
4.12 In the current economic climate, there is a keen and legitimate interest in the reward packages and particularly in bonuses for senior staff across the economy. Against that background, as part of this year's pay policy, Chairs are also being asked to invite their Chief Executive to consider waiving, on a voluntary basis, some or all of any bonus payment that might be due. Such monies should remain within the organisation for use in addressing other objectives. Scottish Government approval for any bonus proposal will still be required, but the Scottish Government will not be collecting information about whether individuals waived some or all of their bonus.
What are the arrangements for multi-year proposals?
4.13 Similar to the approach taken with the pay policy for staff pay remits, a public body may submit multi-year pay proposals for its Chief Executive. Approval may be sought for proposals for up to two years, but limited to the maximum of the Chief Executive's pay range and the ceiling of the relevant Pay Band in the Scottish Chief Executive Pay Framework. This is also subject to confirmation by the public body of affordability for each year of the proposals.
4.14 Multi-year proposals require to be approved by the Scottish Government Remuneration Group. When seeking approval for a multi-year pay award for the Chief Executive, a public body must provide:
- information on costings, based on maximum performance increases, setting out the impact on the overall paybill;
- information on how the proposals relate to other staff in the public body covered by the staff pay remit; and
- an assurance that increases would only be implemented based on performance and that Scottish Government approval will continue to be sought annually in relation to the any future bonus payments.
4.15 Public bodies might wish to consider aligning the duration of the proposals with those for staff in the pay remit. Both years of any multi-year proposal will be assessed and approved on the basis of the Public Sector Pay Policy for Senior Appointments for 2009-10. Increases in this and next year will be limited in each year to the pay policy limits (Basic Award and Total Award limit) in this year's pay policy. A public body will not be expected to seek to re-open an existing or newly approved multi-year arrangement.
4.16 A public body must provide annual outturn information to the Finance Pay Policy team (using the Excel templates). Any bonus proposed will still require annual Scottish Government approval and this will be based on the pay policy in force in the year in which the bonus becomes due. If the public body does not provide such information or adhere to the pay policy then the matter will be referred to the Scottish Government Remuneration Group.
4.18 Any change in the Chief Executive will require new proposals to be submitted for approval.
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