Interactive Investor

Shareholders at two UK banks get their say on pay

One of the these bankers has been asked to stay in his job longer than normal, while a well-paid boss has his wages put to the vote. City writer Graeme Evans has the details.

15th February 2024 22:06

by Graeme Evans from interactive investor

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Virgin Money UK (LSE:VMUK) chair David Bennett is to extend his stay after the board said it needed his “deep experience” for the next phase of the lender’s strategy.

The former Alliance & Leicester boss, who has worked in banking and financial services for 40 years, had been near the end of the usual nine-year tenure for a non-executive role.

But the City regulator has agreed a request allowing him to stay in post until up to October 2026, meaning he will oversee another AGM beyond next month’s gathering in London.

Virgin Money

When: 9am, Friday 1 March.

Where: Addleshaw Goddard, Milton Gate, 60 Chiswell Street, London, EC1Y 4AG.

How to participate: Proxy voting forms should be returned no later than 9am, Wednesday 28 February. More AGM details can be found here.

Who’s in the chair? Former Alliance & Leicester boss David Bennett is nearing the point in October when he will have served on the board for the recommended period of nine years, including as chair since May 2020. With the approval of regulators, he will continue in the role for a further period of up to two years to October 2026. The company said his experience gained over 40 years in the banking and financial services industry, as well as his extensive governance expertise and insight, continue to be of significant value to the board. During this extended period it said Bennett will have a critical role to play in leading the board, including to support Virgin Money through the launch of the next phase of its strategy.

How did the company do in the year to 30 September? The UK’s sixth largest bank, which has about 6.6 million customers, grew operating profits by 9% to £902 million. An increased credit impairment charge and higher one-off items caused by restructuring resulted in a 42% fall in statutory profits to £345 million. A final dividend of 2p a share is due for payment on 20 March, bringing the total for the year to 5.3p compared with 10p the year before. Buybacks meant the total returned to shareholders in the year was slightly higher at £272 million.

How have shares performed? Up 37% to 168.35p (159p on Thursday).

How much is the boss paid? David Duffy received a 3% pay rise in January, taking his base salary to £1.1 million. His total remuneration for 2022/23 amounted to £2.65 million, including   £331,000 in cash and shares after the annual bonus scheme paid 26.5% of the maximum opportunity. This result was impacted by the company missing its pre-tax profits cost:income ratio and return on tangible equity targets. The 41% vesting of 2020 long-term incentives contributed £1.1 million, with these awards being released in five instalments up to 2027.

Is variable pay changing after regulators removed the bonus cap? In October, the Bank of England proposed removing the 2:1 ratio of variable pay to fixed pay. Virgin Money does not expect material changes in the short term but it may put a new policy before shareholders a year earlier than usual at the 2025 AGM.

How did last year’s AGM go? The binding vote on the new three year remuneration policy got 97.88% support and the annual remuneration report received 97.03%.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? Board membership falls short of the 40% target for female representation and there are no senior positions held by a woman. The company is focused on addressing these requirements through its succession planning process. One member of the board is from a minority ethnic background.

Paragon Banking Group

When: 9am, Wednesday 6 March.

Where: Computershare Investor Services, Moor House, 120 London Wall, London, EC2Y 5ET.

How to participate: Proxy voting instructions should be returned no later than 9am, Monday 4 March. More details about Paragon Banking Group (LSE:PAG)'s AGM can be found here.

Who’s in the chair? Robert East, who was appointed in September 2022, has held senior roles at Barclays and is the former chief executive of consumer finance business Cattles, where he led the restructuring and wind-down of its operations.

How did the company do in the year to 30 September? The buy-to-let lender’s underlying profit increased by 25.4% to £277.6 million following 4.7% growth in the loan book to £14.9 billion and the net interest margin widening to over 3%. Underlying earnings increased 34.8% to 94.2p but the unwinding of non-cash accounting fair value gains reported in 2022 meant the statutory pre-tax profit fell by 52.2% to £199.9 million. The total dividend rose 30.8% to 37.4p, including a final distribution of 26.4p a share for payment on 8 March.

How have shares performed? Up 26% to 492p (638p on Thursday).

How much is the boss paid? The salary of chief executive Nigel Terrington increased in October by 3% to £949,000, with £190,000 of this figure paid in shares released over five years. His single figure of remuneration for 2022/23 amounted to £3.25 million, a figure slightly below the previous year’s decade high despite record results and shareholder distributions. Terrington received cash and deferred shares worth £876,000 after the bonus scheme paid 97% of the maximum opportunity, while the 96.41% vesting of long-term incentives contributed £1.4 million to the final figure.  

How did last year’s AGM go? The new three-year remuneration policy got 96.99% support after various changes resulted in a greater proportion of executive pay being delivered in shares.  The maximum bonus opportunity was reduced from 150% of base salary to 98% of total salary and the performance share plan from 180% of base salary to 118% of total salary. The annual remuneration report saw 30.81% of votes cast against the resolution. Feedback suggested no consistent themes for voting against the report, although the remuneration committee acknowledged that disclosure could be improved in relation to the determination of the number of share awards granted under the long-term incentive plan.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? The board’s female representation is 38.6%, with the company committed to increasing the number of women in senior positions and meeting the Women in Finance target of 40%. One director is from an ethnic minority background.

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