Industry | 2009.10.29
BBC to cut more than 100 managers
Senior management to be reduced by 18% and executive board pay frozen for another three years
The BBC will cull more than 100 senior managers and freeze the pay of its executive board for a further three years as part of moves to reduce its £79m executive remuneration budget by 25%.
The measures were announced today by the BBC Trust as part of an overhaul of the BBC\'s remuneration structure that will reduce the £79m annual pay bill for more than 600 of its most highly paid executives by £20m over the next three-and-a-half years.
The restructuring will also see the number of senior managers at the BBC cut 18% by 31 July 2013 – a reduction of 114 out of 634.
The BBC Trust has also endorsed a new pay strategy for senior managers joining the corporation and agreed to freeze the pay of the nine executive board directors, including the director general, Mark Thompson, for three more years.
Today\'s move comes after the BBC was criticised by both Labour and Conservatives over executive pay.
"The Trust challenged the BBC Executive to review senior pay at the BBC," said the BBC Trust chairman, Michael Lyons. "Mark Thompson and his team have responded with a comprehensive set of proposals that strike the right balance between ensuring the BBC can attract the best people to do the job, while ensuring maximum value for the licence fee payer".
Thompson added: "A few months ago we announced our determination to reduce the amount we pay top on-air talent.
"The recommendations we have announced today seek to achieve similar reductions within our senior management community. Senior managers will see their total remuneration fall over the period, with the biggest reductions felt by those in the most senior positions."
A new remuneration policy is being introduced for future BBC executive hirings. It states that salary levels must show "a clear and explicit discount against the private sector when setting senior manager pay".
The corporation has also vowed to review the necessity of "all senior manager posts when they become vacant" and will aim to promote from within "to reduce the percentage of external hires".
However, the proposals will not lead to lower salaries for existing top executives because existing pay deals are legally binding, according to the BBC.
The pay of the executive board will be frozen for a further three years, up to August 2013. The BBC announced the "indefinite suspension" of executive board bonuses in July.
Other senior management salaries will also be frozen until "at least 2011", while bonuses will be suspended for "other directors and senior managers" for a further two years until August 2012.
The Conservative shadow culture secretary, Jeremy Hunt, was unimpressed with today\'s proposals, arguing that the BBC needed to tackle the issue of individual salaries among its top executives.
"The BBC has missed an opportunity to prove it is in tune with the public mood over high salaries," Hunt said. "Public anger was focused not just on the management itself but on the salaries paid to senior executives. The BBC needs to be careful that it doesn\'t lose the public\'s trust by being out of step on such an important issue."
Earlier this month at the Conservative party conference, shadow chancellor George Osbourne fired a shot across the bows of the BBC over senior management pay, warning that top executives could need written permission from the government to earn more than the prime minister\'s £194,254 salary under a Tory regime.
The total remuneration for the nine executive directors for the year to the end of March 2009 was £4.6m, including bonuses and benefits, according to the latest BBC annual report.
This was down from £4.96m the previous year, with Thompson the only board member to see his total remuneration rise.
Thompson was paid £834,000 while Caroline Thomson, the chief operating officer, received £413,000. Other top earners include the deputy director general, Mark Byford, who received £485,000; and Jana Bennett, the head of BBC Vision, who received £515,000.
"I and every other senior manager need to recognise that we are in a different economic climate, that the media sector labour markets are depressed and that there are significant pressures on public finances," acknowledged Thompson.
"Of course I realise this will have implications both for current and future BBC employees," said Lyons. "However, it is right that as a major public service organisation, the BBC shows leadership on this issue during difficult economic times."
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