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The boss of a private hospital company has been awarded an annual bonus worth more than £300,000 after the business he leads benefited from an NHS contract worth £360m during the Covid-19 pandemic.
Spire Healthcare Group’s chief executive, Justin Ash, received a £1.2m pay package in 2020, up from £1m in 2019, and share options that have already soared in value, according to the company’s annual report, published this month.
The package included a base salary of £618,000 plus bonuses and other benefits worth almost £600,000. Ash has donated at least half of his base salary to charity over the last three years, Spire said, and took a temporary pay cut worth £30,000 during the first wave of the pandemic.
Ash was awarded the proposed £322,000 annual bonus after Spire changed its bonus pool for 2020 with targets including “Playing as full a role as possible in assisting the NHS” and hitting “key liquidity priorities”.
Bonuses were spread more widely than usual across the company, with £7.3m shared by more than 13,500 frontline staff in the form of £500 “thank you” payments.
Ash’s pay rise came in a year when Spire and other private hospital providers agreed a deal for the NHS to take over their clinics at cost, and without charging for executives’ time. The unprecedented partnership helped to ease pressures on the NHS during the worst of the coronavirus pandemic.
However, it also acted as a de facto bailout for the private hospitals, according to one expert, because it allowed them to cover rent and wage costs at a time when they were unable to offer elective procedures, or to provide lucrative treatments to foreign customers.
Spire, which runs 39 hospitals, acknowledged in its report that the agreements sustained its revenues and helped it to cut debt during the year, and shares in the company surged after the NHS deal was announced in March 2020.
Net revenues from Spire Covid-19 contracts in England, Wales and Scotland totalled £363m during the year. Spire’s group revenue fell by £61m to £920m, with adjusted operating profits dropping from £98m to £67m.
Many bosses of companies that relied on government support gave up bonus payments during 2020, sparking a debate as to whether executives should be eligible for payouts. Estate agent Foxtons last week received criticism from shareholder advisers for paying a bonus to its chief executive while keeping in state aid. Foxtons said it had cut payouts but that it was right to reward executives’ hard work.
Ash has also benefited in the past year from share options granted under a previous long-term incentive plan. He was awarded options on 6 April 2020, according to the annual report, near the nadir of the market crash prompted by the pandemic. Amid a strong recovery across global stock markets, Ash has booked a paper profit of almost £900,000 in the year of the pandemic, with those options now worth more than £1.8m, Guardian analysis suggests.
Ash’s salary was significantly higher than his counterparts running public hospitals that were also funded by the NHS. Simon Stevens, the chief executive of NHS England, was entitled to a salary of up to £240,000 for the 2018-19 financial year.
NHS workers including nurses in England were offered a 1% pay rise in March 2021. Ash’s total remuneration increased by 20% between 2019 and 2020.
Luke Hildyard, a director of the High Pay Centre, an executive pay watchdog, said: “Million-pound payouts for CEOs of businesses benefiting as recipients of government spending don’t reward good leadership so much as being at the right company at the right time.”
Hildyard said charitable donations were laudable but that they should not be seen as “an alternative to public services funded from proper taxation”.
A spokesperson for Spire highlighted that the majority – 52% – of Spire’s 2020 income came from private patients.
A Spire spokesperson said: “Spire provided vital treatment to more than 250,000 NHS patients in 2020 charged at cost, not for profit, and did not charge the NHS for the overwhelming majority of board costs including executive salaries. Mr Ash took a cut to his basic salary during the year and successfully led the company, and sector, in the urgent response to Covid-19 deploying equipment and expertise built up over years of investment by shareholders.
“Mr Ash continues to donate most of his annual remuneration to charities.”
Ash declined to comment to the Guardian. However, in an interview in May 2020 in the Sunday Times, shortly after receiving the share options, he explained his charitable donations.
“I didn’t feel I needed more money,” he said. “I’m in the countryside, I’ve got a nice garden, my isolation experience is not that tough. There are a lot of people living in flats whose incomes have gone to nothing.”