Nationwide is under fire for refusing to give members a binding vote on a 43% pay rise for its chief executive, Debbie Crosbie, that could mean her pay package reaches up to £7m.
Campaigners say it leaves the building society’s members with fewer rights than shareholders of listed UK banks and exposes a worrying “loophole” in building society rules.
Nationwide says that after its £2.9bn takeover of Virgin Money, Crosbie’s pay should compete with that offered by banks such as Lloyds and NatWest. However, the board is offering members only an “advisory” vote at its annual general meeting (AGM) on 25 July, meaning there are no repercussions if they reject it.
Large high street banks are required to hold a binding vote on their pay policies at least once every three years, under laws governing large businesses listed on the London Stock Exchange. If shareholders reject the policy, they have to revert to the old pay plan and put a revised pay deal to shareholders within 12 months.
Nationwide could do the same, but said it is already going further than required under the Building Societies Act, which requires binding votes only for the election of board members.
A spokesperson said: “As part of our commitment to member engagement and transparency, Nationwide voluntarily puts the remuneration policy to the membership on an advisory basis at the AGM and we currently have no plans to change this approach.”
While Nationwide has never held a binding vote on pay, it has also never proposed such a large renumeration package for its chief executive, which could result in a record payout, up from £4.8m now to £7m. That is close behind NatWest Group, which in April secured backing for a package worth up to £7.7m for its chief executive, Paul Thwaite.
Luke Hildyard, the director of the High Pay Centre thinktank, described the situation as a “loophole in the governance of building societies”.
“Mutuals are supposed to have a more collective approach to business than corporate banks, but while the banks are required to revise pay policies that are rejected by a majority of shareholders, and provide a response to the stock market if more than 20% vote against, building societies can in theory ignore their members,” he said.
“The Nationwide case, where there may be significant discomfort with the huge pay out planned for the chief executive, highlights the need for the loophole to be closed.”
Crosbie’s £7m pay deal has angered some members. “I’m a Nationwide customer and didn’t know about this? Please send me a voting form immediately,” one posted on X. “Building societies are supposed to be the good guys. The apple has fallen far from the tree,” another said.
Sara Hall, the co-executive director at the campaign group Positive Money, said Nationwide “hiking its chief executive’s pay because that’s what the big banks are doing would be completely at odds with what building societies are supposed to stand for”.
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The move is “counterintuitive for an institution whose main selling point is putting its customers before shareholders”, Hall added.
A Nationwide spokesperson pushed back against the criticism, saying its pay proposals – although advisory – “always received overwhelming member support”.
“Any suggestion that we would ever ignore a vote against it is simply ridiculous. We always consider their views and at the last AGM over 94% of votes were in favour of the proposed remuneration policy,” they said.
“Nationwide delivered record member value last year, we are still first for customer satisfaction among high street banks, and more people switched their current accounts to Nationwide than to any other brand.
“We have managed this because we can attract, retain and motivate talented leaders. Even after the changes that are being proposed at the AGM, Nationwide’s chief executive will still be paid substantially less than the other large banks.”