Skipton bosses under fire over ‘irresponsible’ pay

THE board of one of Yorkshire’s largest building societies has come under fire from members over “irresponsible” pay packages and the £260,000 pay-off awarded to the finance director who left after only a year.

Customers at the AGM of the Skipton Building Society, repeatedly questioned directors over the hiring and subsequent departure of Tom Wood, claimed the recruitment process had not worked and criticised the sums offered to chief executive David Cutter and current finance director Richard Twigg.

Alastair Findlay, the chairman, admitted the brief nature of Mr Wood’s employment was a matter for “regret” but insisted it was in the best interests of the society for him to leave.

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He also said the mutual had to pay staff the going rate and warned about threats to the British economy amid the “necessary and painful” government spending cuts.

Members of the Skipton, Britain’s fourth-largest building society, which returned to the buy-to-let mortgage market last month, highlighted the total packages of £463,000, including a basic pay freeze and a £68,000 bonus, for Mr Cutter, and £365,000, including a £53,000 bonus, for Mr Twigg, whose basic salary rose by £3,000.

Peter Hepworth, from Doncaster, a long-running champion of shareholders’ rights, said: “I don’t believe this is responsible in this age of austerity. You say it is the going rate but you (and industry colleagues) make the going rate and say the same thing. This society is owned by members, and the vast majority think the pay is still too high.

“It is difficult to change something like this if few know what is going on.”

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Salaries in the mutual sector are well below those of bank directors and, after a pay freeze last year, the Skipton has raised general salaries by up to 3.5 per cent from this month.

Mr Hepworth, who is retired, complained of the difficulties of getting 500 members to propose a motion for the AGM and tabled an informal proposal that no salary increases or bonuses be paid to Skipton’s directors until profits return to 2006 levels. Members voted on a show of hands with 80 per cent backing his idea, although the board did not offer to implement it.

Other members questioned directors over the way in which Mr Wood was hired and whether he resigned or was sacked. John Dawson, a saver, asked why Mr Wood had been paid compensation when resigning

Mr Findlay said Mr Wood’s employment was terminated by agreement and he resigned.

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Mr Wood was appointed on September 7, 2009 and left on September 22, 2010. The society’s annual report states: “In line with amounts due under his service contract, he has also been paid compensation for loss of office amounting to £262,068.”

Mr Findlay added: “Tom’s departure was in the best interests of the society. I regret that he was only with us for a short time.”

Ken Martin, another member, asked why there was only one woman and no people from ethnic minority backgrounds on the board.

“You have thousands of people you employ and they don’t come through, so you must be doing something wrong.”

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Mr Findlay responded by saying the Financial Services Authority was constantly raising the bar for director candidates.

He also raised concerns over the British economy and how this could affect the group, which reported a 94 per cent rise in pre-tax profits, to £35m, in 2010.

“Although the UK has officially exited recession, albeit tentatively, it is still prone to further threats such as concerns over the financial stability of various European countries, the imminent withdrawal of support measures such as government funding for financial institutions, and the potential impact of regulatory changes on the ability of financial institutions to lend.

“We have also seen determined steps to reduce the UK’s over-exposure to debt through fiscal tightening measures introduced by the coalition Government, which are at once necessary and painful – and represent additional stumbling blocks on the road to recovery, specifically employment and, closer to home for us, the health of the housing market and mortgage arrears levels.”

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The society increased its core tier one capital ratio to 11.1 per cent, from 9.4 per cent, over the year, and Mr Cutter highlighted the £48m profits of estate agency division Connells, down £6m, on 2009.

He said: “Returning the core business to profitability in the last quarter of 2010 was arguably our most significant achievement of the year.

“We continue to hold extremely high levels of liquidity, and its quality further improved during the year.”

The group repossessed 305 properties last year, down 45 per cent on 2009.

Savers continue to suffer

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DAVID Cutter, chief executive of Skipton Building Society, said savers are continuing to suffer with the main interest rate at a record low of 0.5 per cent and RPI inflation at 5.3 per cent.

“Such negative real interest rates are eroding the incomes of the majority of our members. I once called UK savers ‘the forgotten victims of the credit crunch’, and they remain so.

“Policy makers have now arrived at the critical point in their post-credit crunch decision making.

“Do they raise interest rates in an attempt to curb inflation, or do they keep rates at this level for fear of damaging the anaemic GDP growth that is forecast?”

The average customer interest rate across Skipton’s savings products, including instant access, tax-free and longer-term bonds, is 2.51 per cent, he added.

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