BBC publishes findings of reports into executives' severance pay

The BBC has today (Wednesday 4 September) published two new reports into severance pay at the Corporation, commissioned by Director General, Tony Hall.

The reports come in the light of criticisms of the corporation for agreeing a number of deals that have seen senior executives receive walk away with large pay-offs.

Last week, the BBC's director of human resources, Lucy Adams announced she would be quitting her £320,000 role after accusations of blame were levelled at her for the severance pay row.

She was heavily criticised by MPs at a recent hearing of the Commons public accounts committee for signing off a series of contentious pay-off deals for departing executives, including former director general, George Entwistle and chief operating officer Caroline Thomson.

Meanwhile BBC Director General, Tony Hall has indicated his intention to put a £150,000 cap on executive redundancy deals.

The first of the two published reports is from the National Audit Office, commissioned by the BBC Trust. It examines the remaining 90 (of an original 150) severance deals that took place at the BBC from 2010 to 2012 that had not previously been covered in their report published in July.

The second is an audit by KPMG that looks at severance payments from July 2006 to December 2009. This report was ordered by the Director-General in August to establish if there were any further issues arising from payments made in the period preceding the time chosen by the NAO in their reports.

Both reports have made a series of recommendations for improving the process around agreeing severance payments. As a result of these recommendations the BBC has announced today that it will publish a review of all severance deals made each year as part of its Annual Report.

BBC Director-General Tony Hall has asked Senior Independent Director Dame Fiona Reynolds to be the author of this review, which will be published for the next two years and has been introduced to ensure the tighter controls the BBC has introduced are being implemented effectively.

Additional new measures announced today include:

• A detailed business justification report for each severance deal to be written prior to the authorisation of the agreement
• The report to record authorisers for each individual payment
• All reports to be held on file for 10 years with Executive Board members' records to be held indefinitely
• The BBC Senior Manager Remuneration Committee will sign off any payments in excess of standard BBC Redundancy Guidelines
• The BBC Executive Remuneration Committee will have the authority retrospectively to investigate any severance packages brought to its attention by whistle blowers, the Director-General or other Non Executive Directors

These sit alongside new controls already announced which include:

• A severance pay cap of £150,000
• The BBC Senior Manager Remuneration Committee will sign off all individual severance deals over £75,000
• Pay In Lieu Of Notice (PILON) has been removed in all but the most exceptional cases
• The BBC Trust ensuring that decision makers are held to account for any departures from Hall’s new policy by requiring BBC management to report publicly in the BBC’s audited Annual Report and Accounts on any exceptions and the justification for them

Tony Hall said: “Reforming severance pay arrangements and addressing these problems of the past have been a priority for me from day one as Director-General. I commissioned today's KPMG Report to ensure that we can get everything out in the open and help bring this difficult chapter to a close. 

“The Report underlines what we already knew. Approvals, record keeping and oversight were poor. Although the BBC delivered savings of £37m a year in management costs it did it in the wrong way.  The measures I am announcing today further strengthen the new controls I have already put in place. I want to make sure that the BBC does everything it can to give the public confidence we are managing their money in the right way.”

The Severance pay review will:

• Examine whether severance packages are of an appropriate size, are in line with policy and have been properly authorised
• Establish that the new cap on severance pay at £150k has been implemented effectively

As part of this review Dame Fiona Reynolds can:

• Choose to examine any severance packages which she feels merit further investigation
• Make recommendations on further changes to severance policy

In addition to the above there are two Remuneration Committees:

• Executive Remuneration Committee
• Senior Manager Remuneration Committee

Exec Remco will have oversight of all severance packages over £75k which have been approved by the separate Senior Manager Remco.

Exec Remco will be regularly provided with benchmarking data to ensure BBC severance packages are appropriate within the public service.