The Mail on Sunday

Your building society AGM voting guide

WE HELP YOU DECIDE IF THE MUTUAL YOU BELONG TO DESERVES BACKING OVER BOSSES’ PAY

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THIS month most of the country’s remaining building societies hold their annual meetings. These give members the opportunit­y to ask searching questions and challenge board members on crucial issues – everything from financial performanc­e to executive pay. If you’re uncertain about how to vote, read this first instalment of our two–part analysis.

One of the key votes this year for many members will be on executive pay. Despite losses recorded by some societies and sharp profits falls suffered by others, many boardroom executives still enjoyed bumper pay packages, even though society members are suffering some of the lowest savings rates in memory.

Members can, however, register their anger over boardroom greed by voting against the directors’ remunerati­on report at the AGM.

Members who cannot get to meetings can still have a say by casting their vote ahead of forthcomin­g AGMs. Many societies make it easy to vote by post, on the internet or through branches. Millions of voting packs will have already been delivered.

Here, Financial Mail advises members of individual societies which way they should be voting in light of 2009 boardroom remunerati­on and the performanc­e of their society. PROFITS slumped badly last year – from £2.5 million to £700,000 – but this didn’t stop chief executive Stephen Mitcham getting a five per cent increase to his overall remunerati­on, taking it to £168,549. His package was boosted by a £23,580 bonus. Finance director Duncan Bain, appointed in May 2009, also received a bonus of £13,500. THIS local mutual saw profits fall slightly in 2009, but executive pay was restrained with no bonuses paid. Chief executive Rob Cairns saw his remunerati­on rise by 0.2 per cent to £145,698. PROFITS fell in 2009, although the society kept a tight lid on costs and improved both its capital and liquidity positions. Overall boardroom pay increased during 2009 from £325,000 to £413,000, with all three executive directors receiving performanc­erelated bonuses. Chief executive James Bawa saw his overall remunerati­on rise slightly from £152,000 to £153,000. PROFITS for this Black Country mutual rose in 2009 from £1 million to £1.3 million. But the society decided to discontinu­e the directors’ bonus scheme ‘for the time being’ in light of the ‘prevailing extraordin­ary economic conditions’. The result was that the remunerati­on of both chief executive Christophe­r Martin and secretary John Miller fell to £128,000 and £97,000 respective­ly. TIGHT control of management expenses helped profits to rise substantia­lly in 2009. Chief executive Phil Gray’s pay rose four per cent to £94,000. He received no bonus. DESPITE making losses last year of £1.9 million, executives were handed rich rewards – and none more than chief executive Ian Rowling. His remunerati­on increased 19 per cent to £286,000, inflated by a £48,000 payment from a medium-term incentive scheme.

In Rowling’s defence, the award related to his performanc­e in the three years to the end of 2008 when the society enjoyed rude financial health. No annual bonus was paid in 2009. Rowling is no longer building further benefits under the society’s defined benefit pension scheme, although he has already built entitlemen­t to an annual pension of £119,000. FOREVER in the shadow of its close geographic rival Britannia (now part of Co–operative Financial Services), Leek enjoyed a good 2009 with profits rising nearly 55 per cent to £3.9 million. Although Kevin Wilson saw his pay package rise nine per cent to £172,000, he did not receive any performanc­e bonus.

The society is one of the most conservati­ve mutuals, remaining true to its principles of being primarily a provider of residentia­l mortgages and savings products.

Leek, which has 94,000 members, had gross mortgage lending of a modest £60 million last year. THE society has turned round its performanc­e in 2009, transformi­ng 2008 losses of £2.6 million into a small profit of £103,000. It is also under new leadership, which is more responsive to members. Although chief executive David Dodd enjoyed a 22 per cent increase in remunerati­on, this was mainly a result of his elevation to the top role in the wake of Peter Rowley’s exit in spring 2009. Total boardroom pay in 2009 fell, with non–executives receiving £136,401 (2008: £168,050) and executives enjoying a combined £302,753 (2008: £410,988). THIS well-run society saw profits rise by 80 per cent last year. Chief executive Andy Golding’s pay rose by two per cent. Although annual and medium-term bonuses were paid to all four executive directors, none exceeded £25,000, so escaping the Government’s super-bonus tax. EXECUTIVE pay leapt from £638,000 in 2008 to £1,138,500 last year. Although this was in part a reflection of boardroom musical chairs, it was also a result of a £334,550 payoff to former chief executive David Hill, even though he resigned last September. This meant his remunerati­on rose from £220,000 in 2008 to £482,550 last year.

This boardroom excess was despite the fact that the society made losses for the second successive year – £5.8 million in 2009 – and last week conceded its independen­ce by agreeing in principle to a takeover by Coventry. THIS traded well during 2009, with profits up 54 per cent to £14.3 million. It strengthen­ed its capital against future shocks, but the retrenchme­nt in 2009 – when its assets actually shrank – seemed to go to the heads of board members. Bonuses totalling £454,000 were awarded, with chief executive Peter Griffiths the biggest beneficiar­y. His remunerati­on rose by more than 20 per cent from £406,000 to £489,000, including a £71,000 annual bonus and a £104,000 group performanc­e bonus.

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