Time is nearly up for customers of Nationwide Building Society who want to voice their displeasure at the financial rewards being paid to the mutual’s directors.
They have until 11am tomorrow to cast their vote on directors’ remuneration ahead of the society’s annual meeting in Manchester on Thursday. After that, their only option is to attend the meeting in person.
For those yet to have their say, the facts are as follows. In the year to April 4, chief executive Joe Garner received a package worth £2,372,000 – or £46,000 a week.
Worth it? In the year to April 4, Nationwide chief executive Joe Garner received a package worth £2,372,000 – or £46,000 a week
This sum, 2.3 per cent up on the previous year, comprised a £1 million bonus as well as benefits totalling £185,000. To put it in perspective, Garner’s remuneration was 77 times that of the ‘median’ (typical) employee of Nationwide.
His benefits alone – a mix of ‘essential’ travel costs, medical insurance and ‘security’ – were nearly six times more than the £30,939 annual remuneration that the typical Nationwide worker got. Staggering ratios whichever way you look at them.
Garner’s pay is not matched by others in the boardroom but his three fellow executive directors (Chris Rhodes, Tony Prestedge – no relation – and Mark Rennison) received £1,351,000, £1,448,000 and £1,497,000 respectively. The chairman, a part-time position, was paid £391,000.
So, how should you vote? In defence of Garner, his remuneration was below the market average for bosses of similar financial firms.
He also oversees an organisation known for slick customer service, a good current account offering, and a commitment to keeping branches open. It is also about to launch itself into small business banking.
On the negative side, many of Garner’s customers have just been told their savings rates are being given a trim from the start of next month – a move that has angered a lot of readers.
There is also the wider moral issue of whether a business such as Nationwide, owned by its customers as opposed to dividend-thirsty shareholders, should be paying directors seven-figure annual sums.
This is the argument of the Building Societies Members Association, which is imploring Nationwide customers to vote against everything on the ballot paper, including the directors’ remuneration and payment of banker-like bonuses.
In a note penned ahead of the meeting it says: ‘Your Nationwide is the biggest building society, but its performance for members is mediocre and lags behind other building societies – except for misleading propaganda and the amount of members’ money that the directors take. That is where they excel.’
It ends with a plea to customers not to use the ‘quick vote’, which hands their vote to the chairman to cast as he pleases (in favour of all resolutions). According to the society, 80 per cent of customers opt for a quick vote.
So, in short, if you’re happy with the Nationwide as it is, back the board. But if you think the society is being run for the financial benefit of Joe Garner and his cronies, then do as the Building Societies Members Association says and vote ‘against’. Remember, the deadline is 11am tomorrow.
While Hargreaves Lansdown is under the cosh for its exuberant promotion of Woodford Equity Income – a fund now in a state of dismemberment –it should not let standards slip elsewhere.
Research in recent days for the Fund Focus column in Wealth took me to the platform’s details on Mobius Investment Trust, including its share price, charges and performance. This fund was launched in autumn last year by Mark Mobius, former manager of TEMIT.
Sadly, Mobius’s ‘manager biography’ is embarrassingly out of date. It refers to him as still being at Franklin Templeton (the investment management house responsible for TEMIT) and managing its emerging markets portfolios.
For the record, Mobius ‘retired’ from Franklin early last year before setting up Mobius Capital Partners and launching MIT, an emerging markets fund.
As many clients of Hargreaves Lansdown have learnt to their cost with Woodford Equity Income, don’t believe everything the platform says. It could be woefully out of date.