Building society chief’s pay up 7.5pc

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THE chief executive of Skipton Building Society received a 7.5 per cent pay rise and a £53,000 bonus in 2011, despite falling profits at the society.

David Cutter’s basic salary increased to £344,000, up from £320,000 the previous year, while his total remuneration package, including bonus, benefits and pension scheme contributions, rose to £482,000 from £463,000. His bonus for 2011 was 22 per cent less than the £68,000 he received in 2010.

The figures were revealed in its annual report which was published after its 2011 accounts were announced last month.

Skipton increased mortgage lending threefold to £1.7bn but saw pre-tax profits fall by more than a third to £22.2m as it doubled the amount of money set aside for potential losses and paid out nearly £6m to the Financial Services Compensation Scheme.

A Skipton Building Society spokeswoman said: “Having had no increase in basic pay since his appointment in January 2009, David’s salary was externally benchmarked and increased during 2011. Variable pay is determined in accordance with the rules of a bonus scheme, and his award in 2011 reduced by one third compared to the previous year.”

The most highly rewarded building society chief executive in the region last year was Iain Cornish, of Yorkshire Building Society, who stepped down in December. His total salary package was £742,000.

His basic salary rose by £72,500 to £446,591 in 2011 and he received a further payment of £250,203, which included his pay, pension allowance and benefits for the six months to the end of his official notice period on July 1, 2012.

Meanwhile, Mr Cornish’s replacement, Chris Pilling, who joined the company on December 31, received a payment of £156,000 to honour lost earnings he incurred on leaving his role at HSBC.

The UK’s second-biggest building society announced a 12 per cent increase in profits to £129.7m for 2011.

New lending rose by 46 per cent to £4.1bn and it opened 335,000 new savings accounts.

A spokeswoman said Mr Cornish’s remuneration reflected his contribution to the society. “He left a great legacy with a bright future,” she said.

Directors at Leeds Building Society, which saw a 19 per cent rise in pre-tax profit to £50.2m, also received pay increases in 2011.

Outgoing chief executive Ian Ward, who retired from the UK’s fifth largest building society last September, received a total package worth £540,000.

It included a £265,000 salary, a £179,000 bonus, and an additional £50,490 payment under the long term incentive plan following his retirement.

Mr Ward originally wanted to retire three years ago but his plans were postponed twice – once in 2008 following the financial crisis and again in 2010 after finance director and deputy chief executive David Pickersgill, who was set to replace him, went on sick leave and subsequently left the society.

A spokesman for the society said Mr Ward’s remuneration reflected his “flexibility and considerable contribution”.

Meanwhile, Peter Hill, who was promoted from operations director to chief executive, received a total package worth £423,000, up from £287,000 the previous year, which the society said reflected his promotion and his performance against a “difficult economic backdrop”. His basic pay increased from £177,000 to £247,000 and he received a £73,000 bonus.

The spokesman added: “Executive director salaries are lower in 2011 than in 2010 and, when you exclude the additional discretionary payment to Ian Ward, total executive director emoluments are also lower than a year earlier.”