Nationwide: pay us like us bankers – just don’t hold us accountable like bankers (The Guardian)

Many members would baulk at the idea that a mutual society CEO should have the opportunity to earn £6.9m in a single year (a recent subject of Private Eye’s number crunching). Nationwide’s CEO is already the most highly paid building society CEO in history.

Some members may even be motivated to vote AGAINST the remuneration report and remuneration policy at (or ahead of) the upcoming AGM. However, these votes are advisory and non-binding i.e. the board and society can choose to ignore these.

The Guardian article neatly portrays Nationwide as a building society taking advantage of a loophole. Rather than acting like a mutual society, and in the interests of fairness, by putting remuneration to a binding vote of its owner-members, the society instead is arguing that as it’s not a listed company, and has no shareholders, it’s not required (by law) to offer members a binding vote. So instead of doing the right (i.e. moral) thing, it side-steps it. The double-standard is astonishing. Nationwide is effectively saying “we’re not a bank, but pay us like bankers – just don’t hold us accountable like bankers.”

Nationwide is effectively saying “we’re not a bank, but pay us like bankers – just don’t hold us accountable like bankers.”

James SHerwin-Smith, james4nationwide.co.uk

Questions members may want to consider before voting, or ask at the AGM

I also have to question why Nationwide’s board thinks that its executive should be paid in a comparable manner to those working at shareholder-owned banks. For example:

1. £6.9M for the CEO is 280x what a junior employee is paid. How is this appropriate?
2. Nationwide is not listed, so the executive management task is lower, and the individuals are less accountable (remuneration votes are non-binding). Why should executives be paid similarly to a listed company?
3. Nationwide is building society, and as such it is a much simpler and less risky business than a bank e.g. it does no/very little wholesale, corporate or investment banking (and nor should it). Why should executives be rewarded similarly to more complex and riskier banks?
4. Nationwide is a mutual. Why are performance benefits not accruing to members rather than executives?

The Quick Vote props up the approval rate

Note that Nationwide has offered an advisory vote on remuneration since 2003. It instigated the Quick Vote in 2006 (which encourages members to give their vote to the chair). The approval rate immediately jumped from <75% the year before to almost 95%, and has remained >90% most of the time.

Since the Quick Vote was introduced, member turnout has been in decline

Note that since the introduction of the Quick Vote in 2006, despite increasing membership, the number of members that turn out to vote has been in long term decline. Why vote when the board is almost guaranteed to get its way? See Nationwide AGM 2025: the illusion of governance and the futility of membership for more.