Pay-offs must be justifiable

August 16, 2002

Universities will have to publish full details of pay-offs to their vice-chancellors, under guidelines issued this week.

The advice, which followed an investigation triggered by The THES , stipulates that even the source of funding used for compensation for loss of office should be declared.

The change is designed to end the practice of paying vice-chancellors large sums when they leave. Earlier this year, The THES revealed that Sir John Kingman was paid £122,000 compensation after he stepped down as vice-chancellor of the University of Bristol. With his earnings of £130,000, the pay-off almost doubled his income for the year.

In a letter sent to the chairs of governing bodies at all English institutions in June, the Higher Education Funding Council for England ordered that pay-offs for poorly performing vice-chancellors be abolished. It warned that final payments should be awarded with reference to agreed performance indicators. The letter stated that consultation work undertaken after severance must be justifiable "as securingI demonstrable benefit for the institution".

This week's guidance, which strengthens Hefce's line, will come into effect in the financial year ending July 31 2003.

The latest guidelines also insist that each set of accounts shows the vice-chancellor's income, including the salary, estimated value of benefits in kind - such as a car, medical insurance and subsidised loans - and compensation for loss of office. Pension contributions made by the university are excluded from the guidance.

That is the basis on which The THES calculates its annual league table but, at present, institutions such as Canterbury Christ Church University College and the Southampton Institute do not declare this figure.

Sir Howard Newby, chief executive of Hefce, told the chairs of governing bodies in June: "In future, it is important that institutions take care to ensure that the presentation in their accounts of this sensitive information is clear, accurate and unambiguous."

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