The building societies pay BONANZA
How you can fight back against the wealthy bosses’ club that dishes out YOUR savings in...
MOST building society customers have endured a torrid time in recent years as t he interest on their savings has been cut – and cut again. Typically, savers outnumber borrowers nine to one.
Yet the pain felt by these savers – many of them elderly, loyal to the core and dependent upon savi ngs i ncome to meet regular household bills – is not being shared by those who run such mutually owned financial institutions. Exclusive research conducted by The Mail on Sunday shows that many building society chief executives enjoyed inflation- busting increases to their overall remuneration last year. In some instances, the total they received – a combination of salary, performance bonuses and benefits – was up to 50 per cent higher than in 2015.
Although such executive largesse cannot be overturned, building society customers can register their disquiet about it – in the same way that shareholders are now doing to fat cats running some of the country’s biggest companies. It can be done by voting against the directors’ remuneration report ahead of the annual general meeting.
This report details the remuneration of all board members – both executive (employed by the society) and non-executive (independent but paid handsomely for their part-time services). Not only for the year just gone but the previous year as well, allowing society members to see how much remuneration has increased – or in some instances fallen.
The report is in the summary financial statement that all societies send to customers ahead of the meeting, together with voting forms. These allow customers to vote against skyhigh executive pay, as well as the reappointment of expensive auditors and appointment of new nonexecutive di r ect ors. Although the vote on pay is non-binding, a big ‘against’ vote sends a clear signal to the board of customer dissatisfaction.
Earlier this month, more than 7, 000 customers of Leeds Building Society voted against the remuneration report, the biggest ‘anti’ vote of all the resolutions put before them.
While remuneration of bosses has rocketed in some cases, analysis by website SavingsChampion shows that last year building societies applied more than 2,400 cuts to savings accounts – more than three times the level of 2015.
The table below shows the money earned last year by 28 of the country’s 44 building society bosses. This information has been extracted from their 2016 society accounts. Some societies, namely Nationwide,
have yet to publish their accounts ccounts because they have a later financial year end than rivals which stick to a calendar year end. Others produced their accounts much earlier this year because they had an Octo October or November year end. Only the remuneration of those executives whose societies are holding their annual general meeting in the coming weeks has been included in the table. This is because customers of these building societies – millions in total – can attend the annual general meeting and ask awkward questions of the directors. They can also vote against bloated executive pay – either at the meeting in person or by voting ahead of it (online, by post or at a local branch).
There is plenty of ammunition for aggrieved customers to get their teeth into. Of the 28 bosses, 27 male and one lone woman (Darina Armstrong of Progressive), nine received remuneration increases last year of more than 10 per cent. Inflation and average earnings growth are running at just over two per cent.
The biggest increase was awarded to Mark Parsons, boss of Coventry, the country’s third largest society. He saw his remuneration leap by an extraordinary 50.1 per cent to £970,000 – helped by bonuses totalling £359,000. Parsons, ex-Barclays Bank, received three bonuses for his work in 2016 – a £69,000 ‘annual success share bonus’, a £194,000 payout fromfr an executive ‘variable pay plan’pl and £96,000 from a long-term incentivein plan being axed.
Skipton’sS David Cutter saw his packagepa leap by 19 per cent to £831,000.£8 Indeed, it would have soaredso to £921,000 had it not been forfo the fact that some of his performance related pay for 2016 was held back – to be paid at a later date. On top of a £161,000 annual performance award, he received £157,000 from a ‘medium incentive’ scheme.
Twenty bosses got a performance bonus, ranging from the £ 1,000 received by Kevin Wilson (boss of Leek United) t hrough to t he £359,000 handed out to Parsons.
Parsons’ remuneration will be dwarfed by that of new Nationwide boss Joe Garner when details are released in a couple of months time. His predecessor Graham Beale received £2.5 million in the year to April 4, 2016.
Alan Debenham, secretary of the Building Societies Members Association, has long campaigned against building society boardroom excess.
HE SAYS: ‘As I have said at many annual general meetings in t he past, mutually owned building societies should never be in the business of making anybody on their payroll superrich. I find the levels of remuneration for the bosses of Coventry and Skipton totally unmutual and an insult to loyal members.’
Debenham believes building societies should be leading the way in capping pay to ‘stop the obscene inequality which exists in our unjust society’.
Skipton says the remuneration of its executive directors reflects the group’s ‘strong performance’ during 2016 with profits up 15 per cent, savings balances increasing by 10 per cent and customer satisfaction ratings above 90 per cent. It also says executive remuneration has to be ‘sufficient to attract and retain people with the skill and capability needed to run a diversified business such as Skipton’.
Nobody was available from Coventry to defend Parsons’ remuneration.