Secret societies?

Table 3 shows the amount that executive directors were paid by building societies, according to their most recent annual reports. Table 3 only shows those highest earning directors in terms of total remuneration. However, a more comprehensive Table is available on the Money Management website at www.ftadviser.com/moneymanagement, showing exact details of salary, fees, benefits, bonuses and pension contributions. It also shows the totals for every building society in the survey.

Graham Beale, chief executive of Nationwide, is the highest earning director with remuneration totalling £1,7m according to the mutual’s last annual report. The top five places are occupied by Nationwide directors with these individuals taking the lion’s share of the £6.7m that the society paid to directors (executive and non-executive) last year.

Chelsea’s outgoing deputy chief executive, Peter Walsh, retired at the end of 2008, but not before collecting total remuneration of £522,000. Walsh’s total package was over a third of the cash pot allocated to pay directors last year. The total amount paid was just over £1.4m. Walsh’s package made him the second highest paid finance director in the mutual sector after Nationwide’s Mark Rennison, who joined the business from PricewaterhouseCoopers in 2007 and was paid over £1m in salary, benefits and bonuses.

Kent Reliance was the next organisation to appear in the list. Chief executive, Mike Lazenby was remunerated with £481,000 in salary, benefits and bonuses according to the last annual report.

Conclusion

Scrutiny of the mutual sector looks set to continue for some, despite some commentators predicting that the global credit freeze is due to wear off soon. That said, the long term financial strength of Chelsea, Newcastle, Principality, West Bromwich and Yorkshire continues to be debated. Analysts have also warned that any significant change in Skipton’s impairments could result in a downgrade.

Standard & Poor’s is among the ratings agencies warning of margin pressures as a result of interest rates and Moody’s continues to raise concerns about credit losses as a result of the recession. Nationwide, while one of the largest societies, announced only last month that the increase in contributions to the Financial Services Compensation Scheme will have a significant impact on societies, particularly as it restricts what mutuals are able to do in terms of new business.

Concerns are also continuing over whether specialist mortgage books will hold up in the face of growing unemployment in an ongoing difficult economic climate. Despite this, there are signs that some societies are beginning to return to residential mortgage lending. Even with this sketchy optimism, it is likely there will be more casualties before any significant improvement in the economic outlook and unlikely there will be any huge sense of optimism for quite some time to come.

ENDS

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