Bill Sweeney has been vindicated over the Rugby Football Union’s controversial bonus scheme by an independent review despite criticism of “inaccurate” and “inconsistent” explanations in their annual report.
The review into the Long Term Incentive Plan (LTIP), conducted by independent law firm Freshfields, found there was no evidence that the LTIP had been set up “with the aim of ‘compensating’ individuals for loss of income during the Covid period”. However, it also said the statement in the RFU’s annual report for 2023-24 that revealed the bonus payments was “inconsistent” and “inaccurately refers to the LTIP being in recognition of the pay sacrifices”.
Executives including Sweeney agreed to take 20 per cent pay reductions between April and October 2020, before claiming in last year’s annual report that the LTIP payments were related to the salary sacrifices.
The report concluded that the LTIP was “appropriate in the circumstances”. Sweeney, the RFU chief executive, wqas paid £358,000 on top of his increased salary of £742,000, at a time where the RFU made dozens of job cuts and posted operation losses of nearly £40 million.
Similar LTIP schemes introduced by the England Cricket Board and Scottish Rugby Union, which paid out in 2020 and 2022 respectively, were used as benchmarking exercises by Pearl Meyer, the executive remuneration consultants hired to advise on the LTIP.
Sweeney’s annual basic pay was also found to be “not competitive compared to corporate roles, even at the lower end of the FTSE250”.
Regarding the performance conditions set to trigger the LTIP payments, including the blended men’s and women’s win ratio of 75 per cent, the review stated that “overall, we do not think that the apparent overlap in some of the performance conditions is problematic, and consider the metrics selected to be objectively acceptable”.
RFU criticised for lack of consultation
The review also noted “a marked lack of consideration given to communication with council members about the LTIP and the consequent furore that might ensue once details of the payments were finalised”, adding that the communication strategy, for which the RFU used an external consultant, “was not sufficiently timely or properly effective”.
The report added that minutes did not record the extent to which the finer details of the LTIP were reported on and debated in the board meetings.
Supporting the introduction of the scheme, the review deemed the LTIP to be “an appropriate remuneration structure” when introduced in 2021, given its objectives. The latter included improved RFU performance, retaining the existing team of executives and “anticipating the challenges the RFU would likely face in recruiting talent from a limited pool of candidates with unique skill sets”.
It stated that the RFU’s executive board at the time was the right team of people to steer the sport out of the Covid pandemic, and that a LTIP would discourage executives not from a rugby background from accepting outside job offers, bearing in mind that they would not have the same desire to work within rugby union as those with a vested interest in the sport.
Among the review’s recommendations were calls for the LTIP to “be made public to provide greater transparency and accountability”.
Rob Udwin, the RFU president, noted the organisation was pleased that the report had recognised that the LTIP was “appropriate in the circumstances”, adding it was “important to recognise” the review’s specific recommendations.
Udwin added: “The review also suggested there could have been further disclosure in the annual report and accounts on the LTIP; this point is noted.”
