Windfall for chief after pay bungle
One of the sector's highest paid chief executives took home nearly a third of a million pounds last year thanks to a salary hike and a historic financial mistake.
David Cowans, chief executive of Places for People, picked up a total of £314,000. This included an extra £79,000 on top of his £235,000 salary, largely because of a pensions underpayment dating back seven years.
Mr Cowans £235,000 salary leapt by £55,000 from £179,000 in 2003/04 – although this includes a bonus payment due from the previous year.
The figures mean Mr Cowans' take-home pay compares favourably to the Prime Minister, who had a full salary entitlement of £178,922 in 2004/05. But it is still 50 per cent less than the figure he could expect to earn in a similar position with a private sector developer.
Last year Inside Housing revealed the highest paid association chief executive was John Belcher of Anchor who took home £210,000.
Four other directors of PfP also received an additional £19,000 on top of their salaries because of the pension underpayment. A pensions advisor informed the group of the underpayments two years ago. After discussions, PfP's remuneration committee decided the amount should be paid as a one-off lump sum to all those affected.
Mr Cowans ended up with a bumper pay-day because the error coincided with the abolition of the organisation's bonus scheme and its replacement by a flat salary. In 2004/05 he was paid under the new scheme – but was also paid his outstanding bonus of £38,250 from 2003/04.
Zenna Atkins, PfP chair, said: ‘It looks exorbitant because it is a one-off pension payment as a result of ongoing negotiations to get it right, the salary and the bonus for 2003/2004. Obviously we couldn't deny him the bonus from the previous year.
‘I think we all felt we needed to do it right and then get on with it.'
Ms Atkins said it is anticipated that next year, minus the additional payments, Mr Cowans' salary should roughly equate to 1 per cent of PfP's turnover. Its turnover this year was £208 million.
A Housing Corporation spokesperson said its position on pay and conditions for senior executives was set out in good practice guidance published last year. ‘This recognises that associations are independent social businesses and that, within the parameters of the regulatory code, employment contracts are a matter for the board in the first instance,' he said.