The furore over the executive pay levels of senior Co-op employees hits those of us who believe in mutuality hard. We are Co-op members because we believe it does things differently. We must now wake up to what happens in the organisations we own.
Do you know what happens to the money you earn before you spend it? Are you happy with what happens to it when it goes into your Bank or Building Society account?
I thought I was doing the right thing. As well as being a Co-op member, in the 1990s, encouraged by the Nationwide Building Society's pioneering decision to give interest on current accounts, I switched my account to banking with the Nationwide and I chose a mortgage with them too.
When I switched, Building Societies were desperately unfashionable. Societies like the Abbey National and Northern Rock were determined to shake off the constraints of being a Building Society and to move away from the simple system of taking deposits and lending those deposits to homebuyers.
In the post financial crash world, Northern Rock no longer exists and Santander, the Spanish bank that took over Abbey National, announced recently the closure of services in smaller towns and villages, leaving rural customers without a local service.
But Banks and Building Societies want a different image now. Recent advertising by the TSB highlights its investment in Britain and local economies. Similarly, the Nationwide advertises by claiming it is: "On Your Side".
The Nationwide, to its great credit, fought off an attempt to bribe members to demutualise in the 1990s and is now the biggest Building Society in the UK. Today, its stability is an example others envy. Its mutualism is an asset, no longer an embarrassment. Set against Barclays Bank, which announced last month that it was making further staff redundancies and at the same time setting aside bigger bonus provision for its commercial staff, Nationwide looks very appealing.
Unfortunately, there is a problem. And it's one the Nationwide shares with the Co-op: executive pay.
When I chose to go with the Nationwide, part of my decision was based on the simple, mutual concept: that my investment would be paid, not to shareholders, but instead be used to finance borrowing by home buyers.
I did not intend part of my investment to be used to pay £2.3 million last year to its Chief Executive, Graham Beale.
And it is not just the Chief Executive. Members of the Remuneration Committee of the Society, some of whom work part time, are paid hundreds of thousands of pounds. Their job is to scrutinise the pay of senior executives within the Society. Not surprisingly, they have found that the sums paid to the Chief Executive are entirely appropriate.
I have to confess that I have fallen down on my own responsibilities here. When the papers arrived each year from the Nationwide Building Society's Annual General Meeting, I did not scrutinise them as I should. I never have. Until this year.
For this, I am grateful to Mr. Asa Cusack, a man I have never met. He raised the issue at the Society's Annual General Meeting last year. He has also written an blog, for the Huffington Post, on the subject calling for a change in the Society's policy on executive pay. He did not get enough support from members.
I agree with Mr. Cusack and I want to help. I believe that a mutual organisation which claims to be "On Your Side" should stick to certain fundamental principles. It should reward its employees appropriately and proportionately. In a year, a minimum wage worker (assuming minimum wage worker earns £12,000 a year) makes .53% of what Mr. Beale made in total 2013 pay (£2,258,000). The Chief Executive earns 190 times what a minimum wage earner employed by the Nationwide earns.
I have read the pay policy of the Society. It does not contain a commitment to pay its employees the Living Wage. It should. Further, the Society does not commit itself to limiting the pay of its Chief Executive to an appropriate multiple of its lowest paid employee. It should.
If the Society is really on our side, it should maintain co-operative and mutual principles of fairness and equality and not pay excessive sums to its senior executives; it is failing to do so. Mr. Beale's remuneration figure is comparable to the total remuneration accumulated by Antony Jenkins, the Group Chief Executive of Barclays, as reported in Barclay's most recent annual report. Mr. Jenkins made £2,596,000 in total remuneration according to the latest report, hardly a far cry from Mr. Beale's remuneration of £2,258,000. The unfortunate fact is that Nationwide is acting more like a commercial bank and less like a Building Society; more like the norm and less like an alternative.
None of these proposed changes involve the Government. This is about the money that I, along with other members, earn and save. It is high time that I, and you, took responsibility for our own money and what it is used for. We should make sure it is used fairly and productively in the way that I am sure the original members of the Society intended. I do not believe they would have accepted bonuses and pension contributions of £1.5 million on top of its CEO's salary of £800,000 a year.
One of the great benefits of the Building Society is that, as a member, I can put a motion to the AGM of the Society to implement the fair policies I have set out provided that I have 500 members on my side.
I am, therefore, writing to the Chief Executive of the Nationwide Building Society to ask him to accept payment of no more than 75 times the lowest salary within the organisation. If it works for the John Lewis partnership, it can work for the Nationwide too.Suggest a correction