The chiefs of Virgin Money may face a potential backlash from investors due to criticism from a prominent advisor about the £2.6m compensation for its CEO, David Duffy. The advisor argued that the amount was not suitable when compared to the average pay of the bank’s employees.
Pensions and Investment Research Consultants (Pirc), a consulting firm for shareholders such as UK local authority pension funds, expressed worries about the absence of board-level responsibility for sustainability matters at the UK’s sixth largest bank.
Pirc is advising investors to vote against two proposals during Virgin Money’s Annual General Meeting on March 1. These proposals involve endorsing the company’s annual report and pay report. The pay report outlines how a committee of board members determined the compensation for executives based on their performance in the previous fiscal year.
The shareholder advisor expressed concern about Duffy’s compensation, which includes a £331,000 bonus and is 37 times greater than the average salary of a Virgin Money employee, who earns £71,804 annually.
According to Pirc, the CEO’s salary is more than 20 times higher than that of the average employee, which goes beyond the recommended limit and is deemed inappropriate.
The median pay numbers, which determine the middle point of the salary range at the bank, indicate a wider disparity. As per Virgin Money’s yearly report, the chief executive’s total earnings were 66 times more than the £40,254 earned by the median employee.
A revolt from shareholders would negatively impact the FTSE 250 bank, as their pay policy was approved by 98% just last year. This would also be a source of shame for Duffy, who has been leading the banking group since 2015, prior to the £1.7bn acquisition of Virgin Money by Clydesdale and Yorkshire Banking Group in 2018.
The Pirc study was released following Virgin Money’s announcement of a 42% decrease in yearly pre-tax earnings in November. This was due to the company setting aside £309m to safeguard against possible defaults.
Last summer, the lender revealed its plan to close 39 of its branches, which makes up approximately one-third of its network. This decision has put 260 jobs in jeopardy. Currently, the lender has around 90 branches still operating in the UK.
Virgin Money justified its pay choices by stating that providing competitive compensation packages to top executives is crucial for attracting and retaining skilled individuals. The company’s remuneration policy, which was endorsed by approximately 98% of shareholders at the February 2023 Annual General Meeting, is aligned with industry standards.
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The bank’s board is responsible for managing climate change risk and ensuring that our business is held accountable. We have established clear governance and set strategic goals in line with ESG (environmental, social, and governance) objectives.
We strongly support transparency in ESG (environmental, social, and governance) practices, including setting and monitoring strong goals, and sharing this information in our yearly report. This information can also be found on our sustainability page on our website.
Source: theguardian.com
