Is anyone else getting an 11% pay rise this year? Most are lucky to still have a job! Shall I be voting to approve the Directors' Remuneration Report? No, I think not!
I'd ask other members to think hard about how they vote too.
Kent Reliance Fat Cats January 2008 - The Kent Reliance BS reports that its Chief Executive received a pay rise of 35% last year with the rest of the executives gaining 38% over the previous year. The society states that it provides details of how boardroom bonuses are earned except that it does not.
The society provides members with the opportunity to vote against the pay increases but it is not binding and most members do not seem to mind such greed. It is a pity that members do not see such increases in savings interest rates.
The "This is Money" article (and lyndhurst25's interpretation of it) is wrong in several ways.
Firstly, the reduction in profit is misleading, as 2008's profit included a one-off exceptional gain amounting to £8.550m before tax (so about £6m after tax). Take that out, and the reduction in profit is a lot less dramatic - at a time when all societies are reporting profits dramatically reduced.
Secondly, (and this is not obvious from the summary financial statement, but you'd expect a journalist to have worked it out) the salary increase and bonuses included in the 2008/2009 financial year which you quote, relate to the previous (very profitable) financial year, not the current (less profitable) one. Most organisations (if not all) pay bonuses AFTER the year to which they relate.
In the Kent press, Mike Lazenby was quoted saying that following:
Quote:
Mike Lazenby, chief executive of Kent Reliance Building Society, said almost everybody would be worse off. There was nothing in it to help building societies. As for bank bonuses, the Chatham-based society was not paying any this year and that included himself. “The banks should adopt that attitude,” he said.
The salaries are way too high. Especially Mike Lazenby's. He earnt a total of £535,000 for 2009 including a 77k bonus and pension payments! £535,000 is about what most people would earn in 20 years. I would like to know what these bonuses are for given the poor financial performance of the society recently.
Shame on you Mike Lazenby. I urge all readers to vote against the re-election of this overpaid moron at this AGM vote. Use your vote!
A mutual's objective isn't to make big profits. Its objective is to give the best value to its members - which, in the ultimate, is achieved by making the lowest profits consistent with adequate levels of capital (which have to increase in line with the size of the business's lending, and more on top of that because of increasing regulatory expectations).
So, to suggest that bonuses or salaries should track profits is missing the point.
MiserlyMartin
You seem to have totally ignored my point. The 2009 salary isn't based on 2009's financial performance. Does your employer pay you an annual bonus based on predicting its profits with a crystal ball?
So if a mutual is not there to make profits why would they need to increase their CEO's wages by such a high amount and why would they pay him such a high wage in the first place. They could get me to do it for a fraction of the cost and the chances are they would make less money so problem solved?
Not making money isn't an end in itself - d'oh! Being a successful mutual is about running the business very efficiently, and operating on a minimal level of profitability (but not none, for reasons I explained before).
Building societies' key measures of value are the interest margin (the amount they charge borrowers, on average, compared to the amount they pay savers, on average), and costs as a percentage of balances managed.
Kent Reliance's costs are the lowest of all building societies:
Quote:
For the eighth consecutive year the Society has improved the management expense ratio - largely regarded as a measure of efficiency - to 0.39% giving it the lowest published management expense ratio in the industry.
and their interest margin is far lower than average:
Quote:
Net interest margin
0.58%
0.88% latest industry comparable
see note
note: Latest industry comparable for net interest margin is the average of the top 17 societies from results reported between December 2008 and April 2009 so may not be a like for like comparison.
from the same source.
To be frank, I believe that all the campaigns (mainly in the media) against bankers' pay (and, by extension, building society directors' pay) are simply a matter of jealousy. As dealer wins points out, you can save your money (or borrow it) wherever you like ... and that's a decision, for most people, based on value for money, not on irrelevant factors like what the staff get paid.
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I am a member of the Kent Reliance Building Society and yesterday I received its annual report and voting papers for the AGM:-
I hope you received this in the form of an email where you can go online to register your vote and not a bulky document through the post causing even more reduction in K&R`s profit.
Lazenby's pay is now on a par with that of Richard Hornbrook, who runs Chelsea Building Society, which is five times bigger than Kent. In 2006, Hornbrook earned £413,000 (Chelsea's 2007 accounts are not yet published). No one doubts that Lazenby is doing a good job at Kent. But is he really worth every penny and every pound that his board thinks he is? I remain unconvinced.
Well so far Lazenby hasn`t been forced to to find a merger to save the K&R like the Chelsea has.
Lazenby's pay is now on a par with that of Richard Hornbrook, who runs Chelsea Building Society, which is five times bigger than Kent. In 2006, Hornbrook earned £413,000 (Chelsea's 2007 accounts are not yet published). No one doubts that Lazenby is doing a good job at Kent. But is he really worth every penny and every pound that his board thinks he is? I remain unconvinced.
Well so far Lazenby hasn`t been forced to to find a merger to save the K&R like the Chelsea has.
"Rob Procter, Lazenby's deputy, and Bob Scruton, the finance director, both saw their remuneration increase to £337,000 - not far behind that of Yorkshire's Cornish who runs a society ten times bigger."
The executives (Executive and non executive directors) salaries for 2009 equated to around 80% of the 2009 profit of which Lazenby's wages represented circa 31% of the profits.
So what? You could say that for any loss-making company, the directors' salaries amount to -1000% of the profits (or whatever). It doesn't mean anything! Obviously in a more difficult year, salaries (including directors') will be a larger proportion of net profits, stated after charging those salaries, than in a better year.
And, as the sensible objective for a mutual is to earn a minimum level of profits, directors' salaries (and other costs) will obviously be a higher proportion of profits than for a non-mutual.
This same situation seems to be continuing if you read the transfer just sent out. Lazenby and Scruton are already on the board of the new bank and have "generously" agreed to no pay rise or bonus for a year!. More concerning is that with this injection of £50m the same management as before are running the organisation and the lending which lead to bad debts could continue - even without Procter who has now left. It could be the management that needs changing not becoming a bank by the back door. Lazenby, in interviews, seems to be admitting the bad debts are increasing all the time. Could be better to transfer to another mutual - this does not seem to have been honestly explored by the existing board. Suggest a "No" vote could achieve this.
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Pls be nice to all MoneySavers. There's no such thing as a stupid question, and even if you disagree courtesy helps.
