Mix of customer apathy and ‘quick vote’ forms rigged in favour of building societies at AGMs means bosses pay packets continue to go unchallenged
Easy money: David Cutter was paid £1.3m
Many building society bosses enjoyed inflation-busting increases to their pay last year, despite most customers getting a rotten savings deal.
A mix of customer apathy and ‘quick vote’ forms rigged in favour of the societies at their annual general meetings means such largesse continues to go unchallenged. In the past few days, the 2021 pay packages of the bosses of a number of big societies including Coventry, Skipton and Yorkshire were waved through by members with just a ripple of disapproval.
Like shareholders in stock market-listed companies, members of building societies have the right to vote at an annual meeting on numerous issues. These include the appointment or reappointment of directors and the remuneration awarded to boardroom members in the financial year just ended. Customers can vote online, by post, at a branch or at the meeting itself.
Yet most customers do not vote on individual issues such as boardroom pay. Instead, they use a ‘quick vote’, approving all resolutions at the meeting, including a thumbs-up to the pay awarded to executive and non-executive directors.
The Building Society Members Association has long called for this practice to be banned and warns members to ‘never use the infamous quick vote’.
Last month, The Mail on Sunday revealed that 13 society chief executives received double-digit rises to their 2021 remuneration.
The MoS last week attended the annual meeting of the Skipton to gauge the mood of customers. Why the Skipton? Because chief executive David Cutter received £1,309,000 in pay and bonuses for last year – compared with £622,000 for 2020, an increase of nearly 103 per cent.
Just 5,700 members voted against the award to Cutter and his acolytes, while 52,836 approved – 5 per cent of Skipton’s million customers eligible to vote. Cutter stepped down at the meeting after 13 lucrative years as chief executive, in the final five years of which he has pocketed £8,334,000. Though some attendees voiced concerns about pay, Cutter got an easy ride. Within ten minutes of the vote at Skipton’s headquarters he was off to the pub, telling The Mail on Sunday: ‘We’re all off for a few beers.’
Geoffrey Beckett, 84, attended the meeting. He feels voting against boardroom pay is futile. He says: ‘High executive pay has been going on at building societies for years, but there is little us peasants can do about it. So few vote against it that it always gets nodded through.’
While profits and boardroom pay soars at Skipton, savings rates remain close to record lows. Savers are awarded just £5.50 for every £10,000 in a Skipton easy access savings account or Isa.
Eddie and Kate Padgett, both 76, have been Skipton customers for years. ‘Savings rate are absolute rubbish,’ says Eddie. ‘The bosses get these massive pay increases, but we don’t see our savings rates go up very much.’
Skipton said the remuneration of executive directors reflects the record performance of the business last year, with profits up 129 per cent.
So why are so few members speaking out?
At Coventry Building Society’s annual meeting on Thursday, customers raised a number of pertinent questions.
Why were interest rates worse on tax-efficient Isas than standard savings accounts – and both lower than at challenger banks? And how much had the society recently forked out to sponsor the local Championship football club stadium?
Many questions on excessive pay were submitted by members before the meeting, leading the head of the remuneration committee to deliver a ten-minute presentation defending rewards handed to executives including boss Steve Hughes, who received a package for last year totalling £863,000.
Attending a building society meeting used to be a faff. You had to traipse to the society’s headquarters or other venue. But this year most societies have been holding hybrid meetings, which means that you can also attend via computer at home.
As a Coventry member myself, I watched online, submitting questions via its ‘chat’ facility. Of course, it does not beat attending in person. Not just because of the refreshments and entertainment, such as the brilliant Camerata orchestra at Skipton. Awkward questions can remain unanswered online, while executives cannot ignore you if your hand is in the air. Although my questions on boardroom pay were addressed in a fashion, I will attend in person next year. I can then look the executives in the eye as they try to justify their largesse.
Rachel Rickard Straus
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