3 Corporate Governance Report
The committee considered the annual gender and ethnicity pay gap information and was pleased to recommend the voluntary publication of our ethnicity pay gap report alongside the publication of our gender pay gap report. Remuneration Policy Anchor is a housing association and an exempt charity. Its operations include a substantial group of care homes. The care home business comprises a high degree of complexity, risk and compliance obligations. The majority of Anchor’s workforce sit within our care business and consequently the care sector is an important comparator for our remuneration policy and practices. Anchor’s Executive Remuneration Policy takes into account a number of considerations in the setting and benchmarking of executive pay, including: • Recruitment and competition for executive roles comes from both charitable and private sectors so a variety of peers must be considered when setting pay rates. • Anchor intends to pay in the median range, moving towards upper quartile for upper quartile performance. • Levels of and changes to pay within the rest of Anchor’s cohort of colleagues and the need to maintain appropriate relatives. • Feedback from the wider Anchor colleague population, through the annual Listening and Acting survey, interim pulse surveys, Board location visits, the colleague forum and regular reports from the People Director. • Anchor’s commitment to diversity and inclusion, noting any gender and ethnicity pay gaps. Anchor operates a discretionary Short Term Incentive Plan ('STIP') and uses the principles of clarity, simplicity and predictability in its deployment. The STIP is paid post year end and requires participants to meet stretching targets relating to a set of measures in support of our strategy. In the 2023-24 financial year, the STIP measures were profit (EBITDA MRI), regulatory compliance, customer service and the progress of our development programme. Bonus is awarded across a pre-determined range of performance against the four targets. Very demanding targets must be met before the bonus would be paid at the top end of this range. In addition, a participant’s individual performance is measured against their personal objectives and a bonus multiplier may be applied, which ranges from zero to 2x. As a Community Benefit Society, Anchor’s shareholders are its non-executive directors who constitute the majority (9 out of 11 members) of the Board. The Board’s Matters Reserved include the “Approval of the total payout to be made under any STIP, and the individual awards to be paid under such plan to the CEO and executive directors.” The Remuneration Committee’s assessment of organisational performance against the STIP measures resulted in recommendation, and subsequent approval
with management and the Nominations Committee to ensure that our rewards strategy continues to support talent management and succession, as well as looking after our colleagues and frontline staff. The committee recommended an average salary increase of 4% for the majority of colleagues from 1 April 2024 as well as addressing some historic anomalies and compression. The committee is pleased to note Anchor’s continuing commitment to being a Living Wage Employer. Pay increases made from 1 April 2024 were compliant with Living Wage Foundation rates. The Executive Committee and Senior Leadership Team salaries underwent their triennial review during the year. This was supported by independent advice and benchmarking from remuneration consultants, Mercer. Mercer has no relationship or connection with Anchor outside of standard business terms. The committee noted the cumulative impact of inflation in the previous three years, during which time no inflationary pay adjustments had been made to the base salaries of members of the Executive Committee or Senior Leadership Team. Executive Committee and senior leadership base salaries were therefore adjusted to take account of inflation in the prior three years. In addition, further to the external benchmarking analysis provided by Mercer, exceptional salary adjustments were made to a number of senior roles. In order to ensure salaries remain competitive and take account of annual inflationary impacts going forward, the committee determined that executive and senior leader base salaries should be reviewed annually, in line with the rest of our colleagues. The committee considered the performance of the executive and senior management teams for the 2023-24 financial year. The priorities and performance against targets were reviewed periodically, as was the performance of each individual executive against their personal objectives. The committee also set performance targets for the financial year 2024-25, based on a mix of measures including financial and regulatory performance and customer satisfaction. As well as achievement against targets, the committee considers whether performance has been delivered in accordance with Anchor’s values. It also seeks assurance that the organisation has maintained compliance with key health and safety legislation and regulations. The committee received benchmarking analysis from independent remuneration consultants, Mercer, in relation to the fees paid to non-executive directors. The Board considered this analysis and noted the additional time commitment required as a consequence of the breadth of committee work performed by our non-executives, in addition to the additional duties of committee chairs. The Board (excluding the non- executive directors) consequently considered and approved an increase to non-executive fee rates to more appropriately reflect market conditions and take into account their additional duties.
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