Members of Nationwide Building Society have voted in favour of the controversial pay rise for CEO Debbie Crosbie, which brings her potential earnings to nearly £7m.
At the mutual’s AGM yesterday, 25 July, the non-binding vote on directors’ pay saw the resolution passed: 627,982 (94.79%) in favour, 34,492 (5.21%%) against, with 9,390 votes withheld, although there were some critical comments from members, with one branding the Crosbie’s potential 43% raise “an obscenity”.
Another asked: “Does the CEO see both the irony and the hypocrisy of the size of her bonus: an amount in one year that most people would struggle to spend in a lifetime?”
The lack of a binding vote has also prompted criticism from some members and from the press, with some arguing that the mutual was behaving more like a bank.
Asked at the AGM if Nationwide would be turned into a bank, chair Kevin Parry responded with a flat: “definitively, no”.
Crosbie’s pay package is dependent on her hitting all her targets. It compares to salaries at other mutuals of around £1.6m for Susan Allen, CEO at Yorkshire Building Society, or £1.2m for Coventry boss Steve Hughes, but Nationwide points out that it is much bigger – the UK’s second largest mortgage provider and lender.
“Our job is to ensure that we have the very best leaders here at Nationwide,” the mutual’s head of remunerations committee, Tracey Graham, told the AGM, “and we do operate in a competitive marketplace. That is what we need to pay them, for us to believe that we are paying them equally or fairly.”
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Peter Hunt, CEO of mutuals consultancy Mutuo, told Co-op News: ‘Nationwide hasn’t just grown exponentially in the last year, it has directly shared the rewards of that expansion with its members through bonus payments.
“Mutuals elect boards of directors to manage executive pay and oversee the day to day business. That’s how the governance works, it’s not a series of referendums on specific issues. The only way someone could ‘represent’ members would be to be elected by them.”
Robin Fieth, CEO of the Building Societies Association, said: “Pay and bonuses for senior leaders is an understandably sensitive topic and receives a great deal of consideration from building society remuneration committees and boards. When making their decisions on executive pay, to ensure they attract and retain the high-quality talent needed, these committees scrutinise competitive levels and benchmarks within the financial services sector, balancing the need for remuneration to be competitive whilst remaining true to mutual values.”
“Unlike listed companies, which are obliged to put a vote to their shareholders at their AGM, it is not a requirement for building societies to hold an advisory vote of their members on the society’s directors’ remuneration report. It’s a good pointer to how well run and open to members’ views that building societies are, that many choose to do so.”
