Remuneration Policy
The Remuneration Committee determines the remuneration of the President and Vice-Chancellor, as well as the remuneration of other senior post holders, as defined in the Committee’s terms of reference. The Committee also has oversight of the remuneration arrangements for other senior members of staff, including members of our professoriate and senior professional services staff.
The full Terms of Reference of the Remuneration Committee publicly available here.
Executive Remuneration Principles
In determining the remuneration of the President and Vice-Chancellor and senior post holders, Remuneration Committee apply the following principles and approaches:
- Remuneration decisions should balance the need to attract, retain, motivate and reward high quality leaders in a competitive international environment with the need to demonstrate sustainable, effective and proportionate use of resources in the context of student, staff and public expectations.
- There should be clear distinction between inflation-related, performance-related and market-related remuneration decisions.
Note 1: It is for the Remuneration Committee to determine application of an inflationary uplift, which will normally be made in line with the corresponding UCEA or NHS annual pay uplift applicable to other University employees. Performance-related remuneration decisions recognise sustained performance through salary. The University does not operate a contractual performance-related bonus scheme for members of University Executive Board.
Remuneration decisions should be considered with reference to a range of qualitative and quantitative supporting information, including:
- Individual and institutional performance data, including appraisal outcomes and University key performance indicators.
Note 2: Senior post holders in the University participate in the same appraisal arrangements as other employees at Level 4 and above, with contribution assessed with reference to agreed expectations and objectives. The University’s key performance indicators are themed according to the core principles and goals set out in the University Strategy and incorporate measures of student satisfaction and career prospects, staff engagement, financial sustainability, research quality, entry standards, international reputation and league table rankings.
- Market pay benchmarking data, with particular reference to the median remuneration of equivalent or comparable roles within the Russell Group, and especially those in universities of similar size and complexity to Southampton.
Note 3: The UCEA Senior Staff Remuneration Survey is the primary source of market pay data used by the Remuneration Committee, with this supplemented by data from other sources, including the annual CUC survey of Vice Chancellors’ remuneration, HESA salary data, commercial benchmarking data and specifically-commissioned reviews and reports, where required.
- Internal pay benchmarking data, with particular reference to the pay settlements, incremental pay progression, pension schemes and other benefits applicable or available to other University of Southampton employees.
- The remuneration levels of senior staff in partner employers, notably the National Health Service.
Note 4: Many of our highest-paid staff are clinicians, paid at salary levels determined by the NHS, not by the University.
- Matters of equality, diversity and inclusion.
- Job evaluation data, particularly in establishing the relative complexity and value of new or revised roles.
Note 5: The University uses the Korn Ferry/Hay job evaluation methodology for roles at all levels.
- Data on the recruitment and retention of senior staff.
- Remuneration decisions should focus on the value delivered by individuals acting within their executive roles. This does not preclude individuals from pursuing activities beyond the scope of their executive role, but any such activities should not be detrimental to the conduct of their executive role, and will not be the focus of executive remuneration decisions.
- In accordance with the Ordinances of the University, some executive roles are appointed on a permanent basis, whist others are appointed on a time-limited basis. Executive remuneration should be structured accordingly and be time-bound where appropriate.
Other Remuneration and the Reimbursement of Business Expenses
The University’s Consultancy Policy, which is publicly available here, sets out the University’s policy on the retention of income generated through external engagements. This policy applies to all employees, including those within the remit of the Remuneration Committee.
The University’s Expenses and Benefits Manual, which is publicly available here, sets out the University’s policy on the reimbursement of business expenses. This policy applies to all employees, including those within the remit of the Remuneration Committee.
Membership, Attendance and Activity of the Remuneration Committee
The members of the Remuneration Committee are all lay members of the University’s governing body, Council, and are independent of University management. Membership comprises the Chair of Council, the Vice-Chair of Council (who is the Chair of the Remuneration Committee), the Treasurer and two other lay members of Council.
All members of the Remuneration Committee are appointed by the Nominations Committee (whose Terms of Reference are publicly available here) with a focus on ensuring an appropriate balance of relevant skills, experience and competencies. Where necessary, additional expert advice and guidance is sought to inform the Committee’s decision making.
The Committee met three times between 1 August 2023 and 31 July 2024 and corresponded on matters relevant to the Committee on a number of occasions between meetings. Membership and attendance at meetings during this period was as follows:
| Committee member | Capacity | Attendance |
| Judith Macgregor | Vice-Chair of Council (Chair of the Committee since 1 Aug 2018) | 3/3 |
| Philip Greenish | Chair of Council (until 17 April 2024) | 2/2 |
| Ian Diamond | Chair of Council (from 18 April 2024) | 1/1 |
| Stephen Young | Treasurer | 3/3 |
| Alison Vincent | Lay member of Council | 3/3 |
| Jenni Douglas-Todd | Lay member of Council | 3/3 |
In accordance with the Terms of Reference of the Remuneration Committee, the Chair of the Committee may invite other attendees as appropriate, subject to the proviso that no attendee is ever present for any agenda item that concerns their own remuneration, or which for some other reason would cause a conflict of interest. Other attendees during the year were as follows:
- The President and Vice-Chancellor, who attended a part of one meeting by invitation to provide commentary and answer queries from the Committee in relation to the pay recommendations made by him for senior post holders. He was not present for any discussion relating to his own remuneration.
- The Executive Director of Human Resources, who attended all three meetings to provide advice and guidance to the Committee. She was not present for any discussion relating to her own remuneration.
- The Head of Reward, Recognition and Inclusion, who attended all three meetings as secretary to the Committee, and to provide advice and guidance.
- The Reward and Recognition Manager, who attended one meeting to observe the work of the Committee.
Meeting 1: 21 November 2023
The Committee received a report setting out recommendations for the remuneration of Senior Post Holders. These recommendations were presented alongside supporting information including appraisal outcomes, the University’s Executive Remuneration Principles, contextual pay information – particularly the pay uplifts applicable to other University employees – and details of the current remuneration and benchmarking position of each of those under consideration.
The Chair had invited the President and Vice-Chancellor to attend this part of the meeting only, allowing him to provide a commentary to accompany the pay recommendations, and to answer queries from the Committee in relation to those recommendations. The President and Vice-Chancellor then left the meeting.
Following detailed discussion of each proposal, the Committee agreed outcomes which resulted in mean increases of 1.5% for Senior Post Holders, in addition to the application of cost-of-living uplifts during the year, which had been worth 7.1%. The overall mean uplift for Senior Post Holders during the year was therefore 8.7%, which compared with an equivalent figure of 10.3% for the average University-graded employee.
The Committee then reviewed the pay of the President and Vice-Chancellor, taking into consideration the University’s executive remuneration principles and a comprehensive range of comparator data and contextual information to inform discussion and decision-making.
The Chair of Council reported to the Committee on the process, content and outcomes of the President and Vice-Chancellor’s appraisal, as well as a range of relevant University performance indicators, noting achievement across the full range of objectives and consolidation of improved institutional performance. The Committee were unanimous in their agreement of the appraisal summary.
The Committee discussed, at length, a fair and appropriate remuneration outcome for the President and Vice-Chancellor, stressing the importance of ensuring due recognition of continued high performance, both individually, and relative to peers, whilst being mindful of the wider context of pay – and particularly the pay increases applicable to other University employees during the year – and the sensitivities surrounding Vice-Chancellor remuneration.
At the conclusion of these discussions, the Committee agreed that the President and Vice-Chancellor’s salary should increase by 2.5% with effect from 1 December 2023 to recognise continued excellent performance.
In other business, the Committee:
- In accordance with its terms of reference, considered and approved a severance case relating to an employee paid a basic salary of £100,000 or more per annum.
- Reviewed the final draft Remuneration Committee Annual Report for 2022/23, and made some minor amendments, prior to its submission to Council for approval and subsequent publication alongside the University’s 2022/23 financial statements.
- Received a short update from the Head of Reward, Recognition and Inclusion on the University’s gender and ethnicity pay gaps, which had been calculated for 2023 ahead of publication in March 2024.
Meeting 2: 5 March 2024
The Committee discussed the University’s 2022 Equal Pay Review, which had assessed the remuneration of the University’s employees on 1 December 2022, by the protected characteristics of gender, ethnicity, disability and sexual orientation. The Review had been shared with Remuneration Committee for information, ahead of publication later in the month.
The Committee commended the clarity and thoroughness of the Review and were particularly interested in the insight it provided into the drivers of pay gaps, including the impacts of length of service and disclosure patterns.
There was discussion of the processes and controls in place for determining starting pay, and how additional guidance for hiring managers would be beneficial, whilst recognising and retaining the ability of managers to exercise reasonable discretion when agreeing starting pay.
The Committee then reviewed a summary of the small number of severance cases they had considered since a change of its terms of reference in 2018 required it to: “Review and approve severance arrangements for senior post holders, Named Office holders and any other employee paid a basic salary of £100,000 or more per annum”.
The purpose of reviewing these cases was to reflect on the practices adopted for consideration, and the consistency of decision-making, given the relative rarity of cases coming forward for consideration. The Committee concluded that proportionate use had been made of this last resort option, and that the cases falling within Remuneration Committee’s remit should continue to be handled on the current basis.
In other business, the Committee:
- Received an update on national pay bargaining, and the outlook for cost of living pay increases in 2024.
- Received a routine update on the remuneration of other Russell Group Heads of Institution, based on the latest pay survey data and the details published in 2022/23 financial statements in late 2023.
- Received a presentation by the Head of Reward, Recognition and Inclusion, summarising recent recruitment and retention trends. The Committee felt the presentation provided important context for their consideration of senior remuneration.
- Discussed some of the issues that may have arisen from a re-instatement of the Lifetime Allowance on pension saving, which was the subject of national political debate at the time.
Meeting 3: 15 July 2024
The Committee received a report summarising the outcomes of this year’s Level 7 pay reviews, which covered approximately 600 members of the professoriate and 35 senior professional services employees.
It was noted that these pay reviews were completed within budget; that additional equality-related pay increments had been awarded in 18 cases; and that gender pay gaps at Level 7 had narrowed slightly as a consequence. It was also noted that ethnicity pay gaps at Level 7 had widened slightly, but for justifiable reasons related to the number of new starters and newly promoted staff from minority ethnicities within the cohort.
The Committee discussed equality, and the role of equality increments in the review, making particular note of the fact that there remained gender and ethnicity pay gaps of 3.9 per cent and 4.7 per cent respectively among the professoriate, with length of service a contributor to these gaps, as noted in the University’s most recent Equal Pay Review (considered by the Committee in March 2024, and published here). It was also noted that disability pay gaps were not directly considered by the review.
The following actions were agreed:
- A recommendation that pay review budgets are fully-utilised in future pay reviews, finances permitting.
- A request that future Level 7 pay reviews actively consider disability pay gaps, as well as gender and ethnicity pay gaps.
- A request for further modelling of pay gaps at Level 7, building on the analysis conducted as part of Equal Pay Reviews, and taking into account: length of service in grade, faculty and discipline.
In other business, the Committee:
- Received a further update on national pay bargaining, and likely cost of living pay increases in 2024. During the accompanying discussion, it was clarified and confirmed that the ‘cost of living’ uplift, as and when implemented, would be applied to senior post holders in the same way as for other employees.
- Received a routine update on pay benchmarking for senior post holders.
- Conducted its annual review of its terms of reference. No amendments were made.
Remuneration of the President and Vice-Chancellor
During the year covered by this report, Remuneration Committee approved a 2.9% increase to the President and Vice-Chancellor’s salary, from £324,469 to £334,012, with effect from 1 August 2023 as the second stage of the 2023/24 national pay settlement was applied, consistent with the treatment of other University employees. The Committee then agreed a further 2.5% performance-related increase to salary (to £342,362), with effect from 1 December 2023 – as described in the summary of the 21 November 2023 meeting of Remuneration Committee. Overall, this meant that Professor Smith received £339,579 in salary between 1 August 2023 and 31 July 2024.
Professor Smith elected to purchase additional holiday during the year, resulting in deductions from his salary of £7,640.
Professor Smith is a member of the Universities Superannuation Scheme (USS) with the USS Voluntary Salary Cap in place, limiting the accrual of pension benefits to part of his salary. He receives a supplement in lieu of pension, which amounted to £25,458 for the period from 1 August 2023 to 31 July 2024, in respect of the non-pensionable part of his salary. The University made the required employer pension contributions of £21,349 during the year, including the required scheme deficit recovery charge until 31 December 2023, after which there was a change in USS contribution rates.
In common with other senior post holders, the University provides Professor Smith with single membership of a healthcare scheme to help ensure his availability for work, at a cost of £1,182 for the period from 1 August 2023 to 31 July 2024.
For the better performance of his official duties, and as required by contract, Professor Mark Smith lives at the Vice-Chancellor’s official residence in Southampton whilst serving as President and Vice-Chancellor. The residence is used regularly for University meetings and official functions. These living arrangements incurred a taxable benefit of £5,693 and a non-taxable benefit of £7,842 based on market rental prices, during the year.
In the period from 1 August 2023 to 31 July 2024, Professor Smith’s total remuneration was 8.4 times higher than the median total remuneration of all University employees (£47,168 per annum) and 10.1 times higher than the median total remuneration of all University staff, including casual workers (£39,044 per annum).
For the same period, Professor Smith’s basic salary was 8.4 times higher than the median basic salary of all University employees (£40,521 per annum) and 9.8 times higher than the median basic salary of all University staff, including casual workers (£34,562 per annum).
Remuneration Committee will continue to update Council on a regular basis throughout the year and will publish this Annual Report at the beginning of December each year.
Remuneration Committee
Southampton
18 November 2024