Poor returns for savers – but building society bosses reap bonanza
THEY may not earn the fortunes that their rivals at major high st reet banks enjoy. But being the boss of a building society is a lucrative career – even if it is just a local business with a handful of branches providing savings accounts and mortgages.
Exclusive analysis by The Mail on Sunday of the 2018 report and accounts filed by a majority of the country’s 43 remaining building societies shows that the remuneration of many chief executives takes no heed of subdued wage inflation, nor the fact that most customers (savers) continue to receive meagre returns from their savings accounts – despite last year’s rise in Bank Base Rate to 0.75 per cent.
According to our research, of the
ten biggest building societies with financial year ends of December 31, the bosses’ 2018 remuneration ranged from just short of £250,000 (Cambridge) to £863,000 (Yorkshire) with four chief executives earning in excess of £750,000 (see table). The analysis excludes the remuneration received by Joe Garner, chief executive of Nationwide, the country’s largest building society – five times larger than nearest rivals Coventry and Skipton. This is only because Nationwide’s latest accounts – for the year to April 4 – have yet to be published.
But in the previous financial year, Garner took home more than £2.3 million in a mix of basic pay, ‘performance’ related bonuses and benefits. It is unlikely he will have received less this financial year. Apart from Garner, the highest paid building society bosses in 2018 were Yorkshire’s Mark Regnier and Coventry’s Mark Parsons who both received packages totalling £863,000. Last year, Yorkshire continued to shut branches as it sought to streamline its brands and cut out duplicate outlets in towns and city centres.
Skipton’s David Cutter saw his remuneration fall from just over £1 million to £861,000. Although Skipton is a more diverse business than Yorkshire, it is half its size and a tenth that of Nationwide. Cutter’s package included a £234,000 ‘annual performance award’ even though Skipton’s profits fell nearly six per cent to £188 million.
Of the other top 10 societies surveyed, total remuneration increases of 2.6 per cent, 4.4 per cent, 0.9 per cent, 4.1 per cent, 2.4 per cent and 5.6 per cent were awarded to the chief executives of Leeds, Principality, Nottingham, Newcastle, Progressive and Cambridge.
Philip Crozier, a longstanding customer of Principality, is appalled by the directors’ remuneration policy, describing it as an ‘ absolute disgrace’. Philip until recently was chairman of the society’s ‘members’ forum’ – a panel that allows customer representatives to learn about its plans and give their views.
Principality chief executive Stephen Hughes saw his overall financial package increase to £494,000, boosted by a £116,000 bonus. Over the same period, the society’s profits fell by 29 per cent to just under £41 million. Philip, a former civil servant involved in the Welsh Assembly Government, says: ‘The remuneration paid to Mr Hughes in 2018 is out of kilter with the ethos of a building society which ultimately is owned and run for the benefit of customers. When everyone is struggling to earn a decent return on savings, such boardroom largesse sends out the wrong signal to many hardpressed customers.’
He i s also concerned t hat future performance bonuses paid to Principality’s executive directors will be based on less demanding criteria – a result of the replacement of the current ‘long-term incentive plan’ with a so- called ‘ leading excellence award’. In response, Principality says the new scheme is designed to ensure the executives strive ‘to safeguard members’ money’. Remuneration awarded to the bosses of some of the smaller building societies is likely to stick in the craw of some customers. Rises of more than five per cent were given to the chief executives of Leek United, Marsden, Mansfield, Newbury, Tipton, Manchester and tiny Ecology.
Despite the concerns of many customers over boardroom greed, the businesses argue that votes on executive pay at their annual general meetings are overwhelmingly in favour.
At Principality’s AGM earlier this month, more than 91 per cent of customers who voted approved the directors’ remuneration report. Although this was the lowest ‘for’ vote on a series of resolutions that members were asked to vote on, it was still overwhelmingly an endorsement of the directors’ rewards.