£233k 'golden goodbye' sparks concern over executive pay

Housing sector bosses' pay rose at twice the rate of inflation this year, with one departing managing director receiving a golden goodbye worth £233,291.

Bob Herbert walked away from Downland Housing Group with £184,000 of pension contributions and £82,000 loss- of-office compensation on top of his £117,000 salary.

He was managing director of Downland Housing Group, which merged with Affinity Homes to become Downland Affinity Group on 1 April 2003. He could not be contacted for comment at time of going to press but Downland Affinity Group admitted that it was "unhappy" at having to make the payout and had taken legal advice to try to find a way out.

The Housing Corporation is to investigate the history of Herbert's contract amid general concern over the size of payouts in the sector.

A Housing Today survey of the 20 registered social landlords with the most homes revealed that the median average pay rise this year was 5.5% – 2.6% above inflation.

According to a 2003 survey by consultant Incubon, the median average salary for chief executives in the housing sector (excluding pensions and benefits) was £67,698 (HT 28 March, page 26). This compares to an average £129,000 total package in this week's survey of the top 20 housing associations.

The figures for the biggest housing associations by dwarf some of those received by council directors of housing with responsibility for similar numbers of homes.

In a straw poll of the top 50 housing councils, Tony Hood, director of housing for Kirklees Council, was typical of his peers. Hood, who runs more than 32,700 social homes, received a 4% increase of £3000 this year, taking his remuneration to £78,000.

The Housing Corporation took action against payouts for chief executives in January 2002, when chair Brenda Dean wrote to chief executives to tell them that "it only takes a few questionable decisions to tarnish" the sector's reputation (HT 17 January 2002, page 1).

A Downland Affinity spokeswoman said: "We are aware of the damage to the reputation of the sector that can be caused by the high payment of retiring executives."

The revelations about Downland Affinity's salary settlement came just three weeks after David Bennett, managing director of Sanctuary Housing Association, received a £65,000 relocation package, taking his total salary including pension to £230,068 in 2002-03 (HT 29 August, page 7). This is £17,068 higher than the £213,000 previously attributed to Bennett.