VOTE now! Proposed take over of Virgin Money - Nationwide members should be given a vote

Section62

26left said:

spider42 said:

All in all - it still looks to me like management are trying to rush this through without consulting members, when they can, and should. And that if members were properly briefed on the arguments for and against, a vote would be fair and decisive.

My angle on the whole issue comes from a background in democratic process - if Nationwide members want this deal then great, but they need to be asked. The protections put in place to prevent demutualisation also have the effect of stifling member involvement in key decisions, whilst at the same time Nationwide trade on being owned by members and saying they want members to be involved.

What concerns me most about the health of Nationwide as a mutual building society going forward is this pervasive attitude that 'the board know best' and that the 'little people' shouldn't trouble them with our views.  Even if spider42 has made an error in their interpretation of the law (I'm undecided on that so far) their posts demonstrate that some members do posess the critical thinking capacity necessary to challenge (in a positive way) the thinking of the senior management team.  In some organisations that is something which is welcomed.  I'm not sure what view Nationwide's managers take on that, but I think some of those forum members who perhaps imagine they speak for the Board when posting criticism of those who dare to question the Board's wisdom are not really representing what Nationwide as an organisation actually believes.

The overriding issue for me is that the building society legislation is clearly out of date.  It comes from an era where it was assumed people at the top of organisations would do the right thing - and because mutuality is deemed to be good thing in principle, I think mutuals are given a degree of flexibility (or a free pass) which is inappropriate in the modern world, particularly when the organisations have grown to the size some of them have.

The boards of shareholder-owned banks have to answer to the shareholders.  Who do the boards of mutuals answer to?  If anyone thinks the answer is 'the members' then I'd invite them to consider just how effective that process is when the routes to challenge and question are effectively blocked.

Hoenir

Section62 said:

The boards of shareholder-owned banks have to answer to the shareholders.  Who do the boards of mutuals answer to?  If anyone thinks the answer is 'the members' then I'd invite them to consider just how effective that process is when the routes to challenge and question are effectively blocked.

Do they actually answer to shareholders?  Recall when Northern Rock was finally nationalised after having been been run by the Treasury for 7 months. The report published ran to 132 pages. Such was the complexity of the financial structure of the bank. That for all intents and purposes simply provided mortgages and loans. 

26left

Hoenir said:

Do they actually answer to shareholders?  Recall when Northern Rock was finally nationalised after having been been run by the Treasury for 7 months. The report published ran to 132 pages. Such was the complexity of the financial structure of the bank. That for all intents and purposes simply provided mortgages and loans. 

Have a read of this, including the case studies. Shareholder activism is real and can be very effective.
https://uk.practicallaw.thomsonreuters.com/w-029-1019?transitionType=Default&contextData=(sc.Default)

cloud_dog

My question to @26left et al, would be...

Would you agree that the board and the advisers engaged in this process have access to more detailed and more up to date information than yourself?

MSE_JC

Hi all,

The Forum Team have been made aware that there are some misconceptions about why a previous thread regarding this petition was removed, which has lead to some newspapers being contacted and MSE staff having to field phone calls about it.

We are unable to discuss individual moderation decisions publicly for reasons including the protection of our users. 

However, we can say that the thread in question was not removed simply because it featured a petition, nor because of the organisations mentioned in it...as indicated by the existence of this thread.

We hope that clarifies things.

Enjoy the bank holiday weekend!

MSE JC

WillPS

26left said:

Hoenir said:

Do they actually answer to shareholders?  Recall when Northern Rock was finally nationalised after having been been run by the Treasury for 7 months. The report published ran to 132 pages. Such was the complexity of the financial structure of the bank. That for all intents and purposes simply provided mortgages and loans. 

Have a read of this, including the case studies. Shareholder activism is real and can be very effective.
https://uk.practicallaw.thomsonreuters.com/w-029-1019?transitionType=Default&contextData=(sc.Default)

You're unhelpfully conflating shareholders of a company and members of a building society. The two are not at all the same, despite both being ultimate owners of their respective businesses.

One is traded (and typically purposefully bought in to) and gives the holder some right to have a say in things which might affect the tradeable value of their share. The other is simply awarded whether the holder wants them or not, cannot be traded and has no value*. 

It's unreasonable to expect the right and provisions afforded to shareholders, who continually give up on the cash value of their shares in the company in order to remain invested, in a situation where nothing at all has ever been sacrificed to become or remain a nominal member.

*other than in the event of a demutualisation which Nationwide have spent the last 3 decades building up defences to prevent any possibility of, so one can safely assume is not going to happen

26left

cloud_dog said:

My question to @26left et al, would be...

Would you agree that the board and the advisers engaged in this process have access to more detailed and more up to date information than yourself?

No - but I would agree that there is a clear agency problem.  The directors and advisors aren’t going to bite the hand that feeds it - and will all benefit from this deal going through.

By their own admission in the takeover docs - they haven’t even thought about what it will take to integrate these businesses if it goes ahead.

WillPS

26left said:

cloud_dog said:

My question to @26left et al, would be...

Would you agree that the board and the advisers engaged in this process have access to more detailed and more up to date information than yourself?

No - but I would agree that there is a clear agency problem.  The directors and advisors aren’t going to bite the hand that feeds it - and will all benefit from this deal going through.

... so what? Employees of any sort should be rewarded and receive plaudits if they do a good job. The plaudits and reward naturally rise as they head towards the top of a career ladder. Conversely if this goes badly, their careers in finance are likely over.

26left said:

By their own admission in the takeover docs - they haven’t even thought about what it will take to integrate these businesses if it goes ahead.

Nonsense. 

26left

WillPS said:

26left said:

Hoenir said:

Do they actually answer to shareholders?  Recall when Northern Rock was finally nationalised after having been been run by the Treasury for 7 months. The report published ran to 132 pages. Such was the complexity of the financial structure of the bank. That for all intents and purposes simply provided mortgages and loans. 

Have a read of this, including the case studies. Shareholder activism is real and can be very effective.
https://uk.practicallaw.thomsonreuters.com/w-029-1019?transitionType=Default&contextData=(sc.Default)

You're unhelpfully conflating shareholders of a company and members of a building society. The two are not at all the same, despite both being ultimate owners of their respective businesses.

One is traded (and typically purposefully bought in to) and gives the holder some right to have a say in things which might affect the tradeable value of their share. The other is simply awarded whether the holder wants them or not, cannot be traded and has no value*. 

It's unreasonable to expect the right and provisions afforded to shareholders, who continually give up on the cash value of their shares in the company in order to remain invested, in a situation where nothing at all has ever been sacrificed to become or remain a nominal member.

*other than in the event of a demutualisation which Nationwide have spent the last 3 decades building up defences to prevent any possibility of, so one can safely assume is not going to happen

I think you’re missing the point - regardless of whether you’re a shareholder of a public listed company, or a member of a society - organisations are governed by their rules and the law. If the rules and law support calling a meeting and bringing a vote - then activists can rightly challenge management when they are not acting in what is considered to be the best interests of the organisation.

WillPS

26left said:

WillPS said:

26left said:

Hoenir said:

Do they actually answer to shareholders?  Recall when Northern Rock was finally nationalised after having been been run by the Treasury for 7 months. The report published ran to 132 pages. Such was the complexity of the financial structure of the bank. That for all intents and purposes simply provided mortgages and loans. 

Have a read of this, including the case studies. Shareholder activism is real and can be very effective.
https://uk.practicallaw.thomsonreuters.com/w-029-1019?transitionType=Default&contextData=(sc.Default)

You're unhelpfully conflating shareholders of a company and members of a building society. The two are not at all the same, despite both being ultimate owners of their respective businesses.

One is traded (and typically purposefully bought in to) and gives the holder some right to have a say in things which might affect the tradeable value of their share. The other is simply awarded whether the holder wants them or not, cannot be traded and has no value*. 

It's unreasonable to expect the right and provisions afforded to shareholders, who continually give up on the cash value of their shares in the company in order to remain invested, in a situation where nothing at all has ever been sacrificed to become or remain a nominal member.

*other than in the event of a demutualisation which Nationwide have spent the last 3 decades building up defences to prevent any possibility of, so one can safely assume is not going to happen

I think you’re missing the point - regardless of whether you’re a shareholder of a public listed company, or a member of a society - organisations are governed by their rules and the law. If the rules and law support calling a meeting and bringing a vote - then activists can rightly challenge management when they are not acting in what is considered to be the best interests of the organisation.

Au contrare, you're missing the point - the reasons those meetings and votes are (sometimes) impactful is because there is a consequence to the business of upsetting shareholders. The only possible, but not at all likely, consequence of upsetting a few members is dramatically less board support at a future AGM. As you have correctly stated upthread, there is no need for the society to be concerned with ability to raise money through  equity release in future.