BS pay. Vote against?

ReportInvestor

Mail on Sunday

This obscene pay scandal

"....as the Rioja flowed, the conversation became more interesting as this delightful gentleman [a Building Society executive] gave me his take on the industry he has served with distinction for more than 30 years, always putting members first.

In short, he believes many of his counterparts at other societies are grossly overpaid and undeserving of the six-figure annual performance-related bonuses they routinely receive. In a nutshell, he says, it is extremely easy to be head of a well-run building society, so inflated performance bonuses should not be paid as a matter of course. 'Obscene' is the word he used to describe such payments..."

So - should MSE savers vote against escalating pay and bonuses at mutuals like Principality, where Peter Griffiths got a 77% boost to £460,000?

The average rise in 2005 was 10.6% on top of healthy, wage inflation busting increases over the last five years.

Directors' remuneration routinely gets the support of 90% of members who bother to vote each year.

zag2me

Thats because if the building society does well, everyone does well. Directors are the top of any company, they get paid at the top of the scale, thats life

ReportInvestor

Ah success! Who defines it and how is an important ingredient in this equation.

Profits were down, but executive pay was up at

Buckinghamshire
Cambridge
City of Derry
Darlington
Dunfermline
Leek United
Loughborough
Mansfield
Marsden
Newcastle (the CEO has now quit to retire early at 51)
Nottingham
Shepshed
Stroud & Swindon
Universal
Yorkshire

You can devise other measures than profit, such as a vague "member satisfaction" index.

But some executives even try to take credit for a deliberate policy of "profit minimisation". They must have a tough life .

And "success" should also be measured by whether executives are creating a viable long term organisation, or whether they could provide better value for members by merging with a larger mutual - as the Mercantile & Lambeth directors have already chosen to do in 2006.

What I'd like to see is the directors explain their aims to members in advance, so that we have a realistic & pre-determined measure of their achievements (or lack of them).

Any other thoughts?

MiserlyMartin

I've started to routinely vote against any director who has pay above 150K a year, they earn obscene amounts of money. We should all do it.

caveat_emptor

MiserlyMartin wrote:

I've started to routinely vote against any director who has pay above 150K a year, they earn obscene amounts of money. We should all do it.

Well we should all do it but few of us do. Number of votes cast at AGMs is a pathetically small fraction of the membership, so apathy rules ok. As a Nationwide member I'm hacked off by the pay and bonuses the directors give themselves.

ReportInvestor

caveat_emptor wrote:

As a Nationwide member I'm hacked off by the pay and bonuses the directors give themselves.

You could argue that the Nationwide gives the best value per member on board pay.

It is possible to argue that it is the medium / small societies who ape the Nationwide's rewards that are out of order.

The Mail on Sunday editor who wrote the piece in the original post has even made that point himself.

Nationwide accounts for nearly 45% of building society business - and yet there are 60 other society boards of directors who are raking in large salaries.

Is this benefiting the consumer & MSE members? Or should they merge to cut costs, especially their own salaries, bonuses and final salary pensions? [BS employees don't have final salary pensions but almost all the directors do. ]