Mark Kleinman: Nationwide’s pride should be dented by member election bid
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his CityAM column
Nationwide’s pride should be dented by member election bid
‘Proud to be different’, ran the long-running Nationwide advertising slogan. Well, quite: it’s hard to see any of Britain’s big high street banks making quite the same mess of an entirely valid claim by one of its customers to be elected to its board.
To recap, James Sherwin-Smith has put his name forward on the ballot paper for Nationwide’s annual meeting this month. He argues, perfectly legitimately, that the move would improve governance and accountability at the UK’s biggest building society at a time when Dame Debbie Crosbie’s multimillion pound pay package is under rightful scrutiny.
This is the same Nationwide, after all, which specialises in virtue-signalling TV commercials contrasting Dominic West as a rapacious bank executive with the values-oriented mutual which gives something back to its ‘shareholders’ – ie members.
Unfortunately, Nationwide’s treatment of Sherwin-Smith almost wholly invalidates the line of attack it pursues in its marketing campaigns.
It has painted him out to be ill-equipped for the rigours of a major financial institution’s board, and in that, it might conceivably be right. Nationwide has made it hard to vote in Sherwin-Smith’s favour because of its ‘quick-voting’ system which defaults to the board’s recommendations on all AGM resolutions.
Astonishingly – and he says he has a recording of a phone call to back him up – Sherwin-Smith says he was offered help by a senior Nationwide executive to find a boardroom role elsewhere if he agreed to drop his campaign.
Ten days after my original query to Nationwide, and after an earlier obfuscatory statement full of language about “recollections”, the building society said: “No offer of any kind of role was made to Mr Sherwin-Smith in return for him dropping his campaign.”
Why not say that straight away then? “Nationwide’s advertising asks the public to believe that mutual ownership makes it fundamentally different from the big banks. That claim deserves much closer scrutiny,” Sherwin-Smith told me this week.
In practice, Sherwin-Smith is unlikely to inflict more than a bloody nose on Nationwide next week. His campaign is, though, a reminder of the dangers of corporate arrogance, even – or perhaps especially – when it proclaims to be different to everyone else.
Water company pay taps need turning off
Ballsy or brazen? United Utilities and Severn Trent, the FTSE-100 water suppliers, have clearly failed to read the memo from Whitehall about their industry needing to exercise prudence on executive pay.
Take UU as a prime example: the £435,000 ‘allowance’ handed to chief executive Louise Beardmore in lieu of a bonus could hardly be more transparent as a gesture of contempt towards Ofwat’s crackdown. The allowance is not subject to the regulator’s rules, but the court of public opinion may be a different matter.
Similarly, Severn Trent’s decision to double the maximum long-term share award payable to its new chief executive, James Jesic, from 200 per cent to 400 per cent of salary could hardly be more poorly timed.
The reason for the hike, according to the company, was “the increased scale and complexity of [new regulatory settlement] AMP8, alongside the importance of ensuring that the policy remains capable of attracting, retaining and motivating a high-calibre leadership team in a challenging and evolving regulatory environment”.
That’s an odd explanation with a brand new CEO in place. And with Thames Water continuing to teeter on the brink of being placed into a special administration regime, and neighbour South East Water suffering from the shambolic leadership which has cost its chair and chief executive their jobs, further governance rows which damage its reputation are the last thing the water industry needs.
The dual provocation illustrates a poverty of boardroom thinking. The water sector is in a similar reputational predicament right now to that which befell bankers in the aftermath of the 2008 financial crisis, but little has apparently been learnt from it. United Utilities and Severn Trent are risking another unnecessary confrontation, all for the sake of a lack of entirely reasonable restraint.
Mansion House farewell to Reeves is a vanity valedictory affair
So, farewell Rachel Reeves. The City will get an opportunity to say goodbye to the chancellor at next week’s annual Mansion House dinner, a set-piece event ordinarily deployed by chancellors to strut their policy-making stuff in front of an audience of bankers, insurers and asset managers.
There’s some confusion among senior City figures about why this year’s dinner is even taking place at all with Reeves seemingly about to lose her Cabinet post. One described it to me as “a dead rubber”, while another said it was “a completely pointless exercise which should be delayed until her successor is in place”.
That’s not an unreasonable view. Valedictory speeches have their place in politics, but consuming the time of hundreds of businesspeople and financiers with a roll-call of Reeves’s ‘achievements’ over the last two years does feel like a vanity exercise.
As I reported on Sky News last week, though, her aides have been engaged in a frantic last-ditch exercise to try to rescue her chancellorship by asking business groups to lobby Andy Burnham in her favour. As her public comments since Sir Keir Starmer’s resignation also indicated, Reeves obviously feels hard done by in being shoved aside – but the opportunity of a farewell bash in front of hundreds of City grandees after the last two years is an extravagance too far.