Annual Report and Accounts 2012/13 - Royal Devon & Exeter Hospital

80 4. Our Governance
Royal Devon and Exeter NHS Foundation Trust
Annual Report and Accounts 2012/13
Remuneration Report
The Executive Director Remuneration Committee
(EDRC) comprises the Chairman and all the
Non-Executive Directors.
The Chief Executive and Director
of Human Resources are invited to
attend the meetings in an advisory
role and are excluded on issues directly
relevant to them by the Chairman of
the Committee. The Committee is
chaired by David Wright, the Senior
Independent Director. The Committee
is supported by the Trust Secretary.
The Committee’s main purpose is
to set rates of remuneration, terms
and conditions of service for the
Chief Executive, Executive Directors
and Directors, i.e. those persons in
senior positions having authority or
responsibility for directing or controlling
the major activities of the Trust.
The Committee’s work is guided by
a policy framework for Executive
Director remuneration and conditions.
The policy sets out a framework by
which the EDRC will manage the
remuneration and terms of service
of the Chief Executive and Executive
Directors. The policy details the
approach that the Committee will take
to executive remuneration, how the
policy will be applied, and the duties
and responsibilities of key staff. The
policy allows a reasonable level of
flexibility on which the members of
the committee will apply their best
judgements in reaching conclusions
about the remunerations of Executive
Directors. Although the policy
provides a framework for determining
remuneration for Executive Directors,
once again this year, the Committee
has, in effect, suspended the application
of the policy. This was on the basis
that the political and economic context
meant that it was not possible to move
the remuneration packages of the
Directors towards the median point.
In reviewing salary levels during the
year, and taking into consideration the
prevailing external policy environment
and using the evidence gained from
the updated comparator information,
the Committee took the view that
there would be no adjustments made
to the salary levels of the Executive
Directors. In doing so, the Committee
were cognisant that the benchmarking
data again demonstrated salaries were
significantly below the peer group.
Despite this, and in view of the pay
freeze for all other staff groups, the
policy was, in effect, suspended.
In taking this view, the Committee
recognised the low comparative salary
levels exposed the Board to a degree
of risk in a competitive employment
market and the approach may not be
sustainable in the future.
Given that the Committee reached the
view that it had not been possible to
implement the policy for the previous
two years, Committee members
raised some searching questions as
to whether the policy framework was
therefore fit for purpose and whether
the policy as a whole should be set
aside. In particular, the elements of the
current framework that relate directly
to internal relativities between the
Chief Executive and Executive Directors
was felt to be unnecessary and could
potentially impede the Trust’s ability to
appoint the best candidate. As a result,
the Committee decided to take steps
to replace the existing policy with a
new set of principles to help guide its
decision-making. These new principles,
which are currently being developed,
will draw on those elements of the
existing policy framework that are
considered to be of use. For example,
the continued use of a comparator
group of similarly sized Trusts outside
the South East (a group which has
expanded over the year) was felt to
provide a useful barometer against
which to compare remuneration rates.
The Committee received the results
of the appraisals process for Executive
Directors that was taken forward by
the Chief Executive. On the basis of
360-degree feedback from Executive
colleagues and Non-Executive
Directors, the Committee was briefed
on the performance of each of the
Executive Directors in their role as
Board members and details of relevant
continuing professional development.
During the course of the year the
Trust has embarked on a Senior
Management Review (SMR) as part