Annual Report and Accounts - The Great Western Hospital

4.5 Remuneration of senior managers (Executive Directors)
In May 2010 the Committee received benchmark information on Executive salaries. The
Committee considered market dynamics, internal relativities and the risk to the organisation of
losing key staff. Pay increases were therefore agreed in respect of 2010/11 for three Executive
Directors following assessment of the pay market. There were no inflationary increases for
Executive Directors.
In April 2011 the Remuneration Committee decided not to agree an inflationary increase for
Executive Directors. A further review of those salaries against the market was undertaken and it
was resolved to pay a non-pensionable and non-recurring uplift of 4% in recognition of hard work in
delivering the Trust strategy.
Having regard to the future the Committee has considered recent developments in remuneration
practice in the public sector, advice from Hay Group and the recommendations of the Hutton
Report, particularly the proposition that a proportion of executives’ pay should be at risk. The
opportunity was taken to introduce the concept with the appointment of a new Chief Executive. A
basic salary was approved with the opportunity to earn an additional 20% if agreed performance
measures are met. The Committee has a clear view that there must be a vigorous threshold to be
achieved before payment of all or part of the variable element can be considered. It is intended to
introduce variable pay for Executive Directors from April 2013.
The Committee recognises that Directors’ remuneration does not in all cases reflect current market
levels and therefore to ensure the Trust can continue to recruit and retain high calibre Directors, the
Committee plans to undertake a fundamental review of Executive Director remuneration during
2012/13. The Committee aspires to offer top quartile remuneration for top quartile performance.
4.6 Performance of senior managers
The appraisal process adopted in 2009/10 for the Chief Executive and Executive Directors involves
a 360 degree assessment of each Director against a range of competencies based on those
devised by Hay Group for Foundation Trust Directors and an assessment of performance against a
set of objectives agreed with each individual. This provides an effective system for setting individual
objectives and performance measures each year. The process has been used to assess
performance in 2011/12 and to set objectives for 2012/13. In the case of the Chief Executive the
review is carried out by the Chair and for other Directors by the Chief Executive. The Committee
receives a summary report into the performance of each Director.
The Committee reviewed approaches to Board assessment and development and commissioned
the National Institute for Innovation and Improvement, who had developed a Board Development
Tool (BDT) for Foundation Trusts to undertake a review of its effectiveness. This was undertaken
in the summer of 2011 and is continuing. The Committee was also keen to ensure that the Trust
established a longer term relationship with Board development external partners as members felt
that this would be beneficial in the Board’s ongoing development.
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