Importance Score: 65 / 100 🔴
Building Societies: Community Support and Executive Pay
Building societies often garner personal finance commendation for their commitment to local areas. Unlike many banks that have closed branches, these institutions generally maintain a presence in smaller towns, demonstrating a focus on community banking. They are frequently lauded for their customer-centric approach, and this publication has consistently supported their appeals to protect cash ISAs.
Cash ISA Allowance and Tax-Free Status
While a reduction in the annual cash ISA allowance of £20,000 appears probable, especially given recent Treasury Select Committee discussions, the tax-free status of existing funds within these accounts is expected to remain secure. This is a relief following initial concerns raised by the Building Societies Association.
Cash ISAs as a ‘Mini Tax Haven’
In the current economic climate of increasing taxation and financial challenges, cash ISAs offer a valuable tax-efficient savings option for individuals of all ages. The protection of these cash ISAs remains a key concern for savers across the nation.
Executive Remuneration Under Scrutiny
Despite their community focus, building societies are not exempt from criticism, particularly regarding executive pay. While the majority of the remaining 42 societies operate straightforwardly, providing essential financial services, the remuneration packages for some chief executives reach figures that are unattainable for most. Notably, leaders at the helm of the largest societies often receive seven-figure sums.
Rising Executive Pay Amidst Economic Pressures
Furthermore, in numerous instances, executive remuneration is increasing at a rate exceeding both inflation and average earnings growth, raising questions about fairness and proportionality.
2024 Financial Accounts Highlight Top Earners
Recent analysis of the 2024 financial accounts from 34 building societies reveals significant disparities in executive compensation. This assessment was conducted amidst broader financial news, including the repercussions of international trade tariff decisions.
Top CEO Earners in 2024
- Susan Allen (Yorkshire Building Society): £1,695,000
- Steve Hughes (Coventry Building Society): £1.2 million
- Stuart Haire (Skipton Building Society): £1.1 million
These three chief executives each received remuneration exceeding £1 million in 2024. The accounts for the remaining eight societies, including Nationwide, are anticipated later due to their differing financial year-ends.
Breakdown of Executive Compensation
The figures represent the total compensation packages, encompassing salary, bonuses, pension contributions, and benefits such as private medical insurance and car allowances.
Susan Allen’s Remuneration Package
Susan Allen, heading Yorkshire Building Society, received the highest remuneration at £1,695,000, marking an 11 percent increase from the previous year. A significant portion of this, £770,000, was a bonus linked to achieving various corporate objectives, including profitability, improved customer satisfaction, and progress towards environmental sustainability.
Since joining Yorkshire Building Society in March 2023 from Barclays, Allen’s total earnings have reached £5,741,000, boosted by £4,046,000 in replacement awards to compensate for benefits forfeited upon leaving her previous role.
Steve Hughes and Stuart Haire, leading Coventry and Skipton Building Societies respectively, also received remuneration packages exceeding £1 million in 2024.
Anticipated Remuneration for Nationwide CEO
Debbie Crosbie, Chief Executive of Nationwide, is expected to have a remuneration package that surpasses these figures when Nationwide’s accounts are published. In the last financial year, her compensation totalled £2,410,000.
Member Voting Rights and AGMs
While some customers may be indifferent to high executive pay, focusing primarily on service quality and product offerings, others may hold contrasting views. Regardless of individual perspectives, members have the right to express their views on director remuneration by voting on the directors’ remuneration report at the Annual General Meeting (AGM).
Upcoming AGMs and Member Participation
Societies with calendar year-ends will mostly conduct their AGMs later this month. Specific dates for Yorkshire, Coventry, and Skipton AGMs are the 29th, 24th, and 28th of April, respectively. Members are entitled to attend, vote, and pose questions to the board at these meetings, enabling direct engagement on issues such as executive pay.
Societies’ Justifications for Executive Pay
Yorkshire Building Society stated that executive pay levels are necessary to ‘attract and retain the right talent’. Coventry Building Society commented that their Chief Executive’s remuneration ‘reflected his leadership of an organisation that has delivered sustained and consistent membership-focused results’. Skipton Building Society did not provide a statement when contacted.