Nationwide: Vote No
This weekend I got up in the middle of night, ran through Broomhall, across Hanover way, along Division Street, and plastered the Barker’s Pool branch of Nationwide with posters bearing the simple message "£3m for CEO? Vote NO @AGM". Then I started a petition against its board [1]. This is why.
Minimum wage is currently around £12,000 a year. This year Nationwide CEO Graham Beale made £2.26 million [2]. His package is worth 190 minimum wages. For two days chiefly executive-officiating he gets what one of his staff will get for a year spent cleaning toilets. If things go well next year, he could be up 28% to £2.9 million.
Asked last year if he was comfortable with his pay, he said, “I'm not going to answer that question, but I will say that we need the right people at Nationwide.” If this is your best answer, Graham, then frankly you're not the right people.
Four other executive directors received an average of £1.4 million each. Chairman Geoffrey Howe's part-time role netted him £300,000. If it sounds like more of the usual bonus bonanza, that's because it is. Sickening enough when it's Barclays or RBS, but Nationwide isn't even a bank!
The first line of defence is performance. A 56% rise in underlying profit looks impressive, but that's only relative to last year, when directors gave themselves healthy raises [3] despite plummeting profits. And with so much ill-will towards banks, since 2008 they have been shooting fish in a barrel [4]. Custom is theirs to lose.
But just like the bankers, they take any success as evidence of their supernatural skill and indispensability. In 2011 chairman Howe defended his £300,000 side-project by saying Nationwide “would cease to exist” if directors were paid too little [5]. CEO Beale, meanwhile, has given himself an almighty pat on the back with a pay rise of around 45% since 2009 [6].
Forgetting David Mitchell's good point well-made [7] about the perversity of getting bonuses for (almost) doing your job to a normal standard, performance-related pay doesn't even work. A recent meta-analysis [8] (a statistical analysis of results) of 44 UK-focused studies concluded: “We find no practically relevant pay-performance link when the entire research record is considered.”
Resorting to technical innocence, Beale deflects customers’ anger by farming out responsibility to someone else. As usual pay is set by a fancy sounding Remuneration Committee, and as usual it's made up of the CEO's mates at the other end of the boardroom table.
“But we get an independent consultant to tell us the market median!” The consultant is Hay, whose own profitable advisory role means it is anything but independent. And why compare your mutual to profit-seeking banks renowned for their toxic corporate culture? The auditor could step in, but it turns out to be PwC, one of the Big Four accountancy firms recently judged [9] by the Competition Commission to be too close to the companies they audit.
So the board sets targets linked to massive bonuses, gets them rubber-stamped by interested parties, then looks on aghast as the bonuses are triggered.
In thus acting like a bank, they forget their unique role in the financial sector at the time when they should be most mindful of it. As its website boasts, “Nationwide has mutual status, which means that we are owned by and run for the benefit of our members,” rather than for profit. Mutuals should be keeping the banks honest, showing them that social justice and financial stability go hand in hand.
Imagine an alternate reality where Nationwide directors halved their pay and used the difference to bump up the salaries of their lowest-paid workers, to swell the coffers of Nationwide's charity arm, or simply to lower their charges to customers. Imagine they marketed themselves as the bonus busters, the financial institution that is still lending, the fair but effective alternative to crooked banks. The sound of customers talking with their feet would put the fear of God into the big banks.
So what’s to be done? Well, between Nationwide and subsidiaries Dunfermline, Derbyshire, and Cheshire, there are seven million of us. That's a lot of noise. Write a letter, attend a talkback event, or make executive pay a "talking point" on their website. Go guerrilla, download my posters (1 & 2) and stick them on your own branch. Or put these (A & B) in your window. Some members are bound to see it. And whether you're a member or not - because this affects us all - please sign the petition.
Crucially, with Nationwide being a mutual, we have a say at the AGM. One member, one vote. If you've voted already, request a new voting pack on 0800 30 20 15. If you haven't, vote online (making sure to choose ‘Standard Vote’), then vote NO on remuneration and against re-electing the CEO and Chairman if they've lost your trust. Otherwise, turn up angry at Manchester's Bridgewater Hall on 24th July.
When even the good guys aren't good guys anymore, we have to take matters into our own hands.
@AsaKCusack )
