CYBG promises to ‘engage with shareholders’ after investor backlash over bonuses
YORKSHIRE Bank owner CYBG has promised to engage with shareholders after witnessing a backlash over bonuses at its annual general meeting.
More than a third of shareholders have voted against its executive pay plans.
The group - which recently bought Virgin Money for £1.7 billion - said 34.2 per cent of investor votes were made against its pay proposals at its annual general meeting in Melbourne, Australia.
A further 7.4 million shareholder votes were withheld.
CYBG said while the plans were approved, with 65.8 per cent of shareholders voting in favour, it “recognises the large number of votes opposing the resolution” and has pledged further talks with investors.
The investor rebellion comes after CYBG revealed plans to boost payouts and bonuses for chief executive David Duffy and chief financial officer Ian Smith.
The plans mean Mr Duffy’s potential bonuses would rise to 118 per cent of his salary, while his long-term share payout would rise to 177 per cent - meaning his total maximum payout could jump from £1.8 million to a possible £4.2 million if all targets are met.
Mr Smith could see his total pay package surge from £914,000 to £2.1 million.
On the shareholder vote, CYBG said: “In addition to the extensive consultation of shareholders undertaken prior to the publication of the directors’ remuneration report, the company will further engage with shareholders on the implementation of its remuneration policy over the coming months to ensure shareholder views are fully understood and considered.
“These views will also inform the company’s remuneration policy which will be subject to shareholder approval at the company’s 2020 annual general meeting.”
Influential shareholder advisory group ISS had suggested investors should vote down the proposals ahead of the AGM, questioning the rationale of the pay plans so soon after the Virgin deal, adding CYBG’s shares have dropped sharply since the takeover was approved.
Shares in CYBG have fallen by 38 per cent since October. The AGM vote also saw 6 per cent of investors vote against re-electing both Mr Duffy and Mr Smith.
CYBG recently revealed it swung to a full-year loss of £164 million after it was forced to take an extra £150 million charge linked to the mis-selling of payment protection insurance (PPI).
In a statement issued to The Yorkshire Post, CYBG said: “Our remuneration committee consulted with shareholders on our proposals for executive directors’ pay in advance of publishing this year’s remuneration report.
“While shareholders have approved our proposed approach to executive pay, we will continue to engage with them over the coming months to ensure their views are fully considered.”
CYBG said its proposed approach brings executive directors’ variable pay into line with comparable financial services firms in the UK.
This approach also increases the amount of overall pay linked directly to the performance of the bank and “stretching long-term targets”, CYBG said in its statement.