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Model Terms of Reference for a Remuneration Committee in a Charity

Of interest to those involved in charity governance.

Introduction

The issue of executive pay in the charity sector (and other parts of the economy) regularly attracts the attention of the media and sector commentators. Regardless of views as to what is deemed to be an appropriate level of remuneration for senior leaders in diverse and complex organisations as those found in the charity sector, there is an expectation that charities should be transparent about how they spend their resources. This includes the level of remuneration paid to senior staff members.

Purpose of this guidance

This guidance note offers model terms of reference for the remuneration committee of a charity registered in England and Wales. It is informed by governance standards in other sectors and draws on the experience of governance professionals from across a wide range of charities and other organisations, and includes relevant good practice from some of the UK’s largest listed companies. The model document identifies key aspects of the Charities Statement of Recommended Practice (SORP) and the Charity Governance Code (the Code) relating to the remuneration of senior staff members and its disclosure. It also applies the recommendations contained within NCVO’s Inquiry into Charity Senior Executive Pay and Guidance for Trustees on Setting Remuneration.

This document includes:

  • Introduction
  • Purpose of this guidance
  • Sector specific requirements on executive pay
  • Notes on the terms of reference

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