Yes, building societies need the best, but at what cost?

IT IS THAT time of year when most building societies begin to publish their annual reports and accounts. Although such financial tomes are hardly recommended bedtime reading material, they do shed a light on the health of an industry which provides many savers with an alternative home for their money from the banks.

While all building societies are not the same, they tend to be more customer-centric than banks.

For example, they often have branches in towns that the banks have long deserted, while the smaller ones tend to be community focused. They are also more receptive to maintaining savings passbooks – much loved by the elderly – and usually have branches dominated by friendly staff rather than banks of cash deposit and withdrawal machines.

Yet flicking through the 2023 calendar year accounts that have so far made it into the public domain, there is a recurring theme which should jar with many hard-pressed households – and that is booming boardroom remuneration.

Despite the financial hardship still faced by many households across the country, the bosses at top 10 building societies Leeds, Coventry, Nottingham, and Principality were all last year awarded double-digit percentage increases in their remuneration.

Coventry’s Steve Hughes saw his pay package break the £1million barrier to £1,086,000 – a 12.3 per cent increase on the previous year.

His remuneration was boosted by performance-related pay of £447,000. Richard Fearon, his counterpart at Leeds, received a 14.6 per cent pay boost, taking his total remuneration to £862,000, while JulieAnn Haines and Susan Hayes at Principality and Nottingham respectively saw rises of 18.2 and 25.8 per cent (Hayes was only chief executive for nine months in 2022). In contrast, the bosses of Skipton and Newcastle saw their total remuneration fall. Nationwide (the biggest society by a country mile) has an early April year end, while Cumberland and West Brom’s accounts are to the end of this month. So these accounts won’t be available for a while.

This leaves Yorkshire. Its new chief executive Susan Allen OBE, pictured left, joined the society in March 2023 from Barclays where she was head of customer transformation. Her remuneration from Yorkshire last year was certainly transformational – an eyebrow-raising £4,046,000, including a £777,000 bonus (for nine months hard work) and a £2.5million ‘replacement’ award (compensation for the awards and incentive opportunities she forfeited by walking out of Barclays to join Yorkshire).

To put this into perspective, Nationwide boss Debbie Crosbie received £3,455,000 in the year to April 4, 2023, which included a £1,705,000 replacement award for bonuses lost by leaving TSB to join the mutual.

Yes, it’s imperative building societies are run by some of the most talented people within the financial services industry. But there is a thin line between appropriate and excessive remuneration. I will leave you to decide which side of the line Allen et al stand on.

Drop me an email with your thoughts at jeff.prestridge@mailonsuday.co.uk.