The chief executive of Skipton has joined an exclusive men-only elite of building society executives – the £1 million-a-year club. David Cutter, 56, and a Skipton employee for more than 25 years, received remuneration last year totalling £1,012,000 – an inflation busting 9.9 per cent increase on the year before.
This heady sum – a mix of pay, benefits and bonuses – is supported by an accrued pension that will pay him at least £90,000 a year when he comes to retire.
Cutter, a former international hockey player, is the proverbial king of Skipton castle – the town’s medieval castle which the building society embraces as part of its corporate logo.
In the money: David Cutter, boss of Skipton Building Society
Among the country’s 43 other building society bosses, Nationwide’s Joe Garner is the only one who also receives a seven-figure annual pay package.
Although Garner earned remuneration totalling £3.4 million in Nationwide’s financial year to April last year, he oversees an organisation more than ten times the size of Skipton.
Unlike Cutter, Garner’s 2017 pay will not be revealed until early summer when Nationwide’s accounts are published. The bosses of Coventry and Yorkshire – societies twice as big as Skipton – received less pay last year than Cutter. In defence of the Skipton boss, the business he oversees is more diverse, embracing an estate agency (Connells) and retirement specialists (Retiresavvy).
His rich rewards are revealed as part of a special investigation by The Mail on Sunday into the remuneration of building society bosses.
Despite most customers of these organisations continuing to suffer from paltry savings rates, the pay packets of many chief executives have spiralled, boosted by six- figure performance-related bonuses.
The bosses of Coventry, Leeds, Nottingham, Principality, Skipton and Yorkshire were awarded 2017 bonuses ranging from £103,000 (David Marlow, Nottingham) to £363,000 (Mark Parsons, Coventry).
Five bosses received bigger percentage increases in remuneration last year than Cutter including the chief executive of Manchester, despite the fact the business continues to suffer losses. Loss-making building societies are usually frowned upon by the City regulator and taken over.
Only the boss of Saffron saw his financial package shrink as a result of overseeing systems changes which compromised the society’s ability to write new mortgage business. In total 15 chief executives – of the 24 where comparison with pay in the previous year was possible – received increases in remuneration ahead of inflation.
Even ‘retirement’ was rewarded with Graeme Yorston, who made way early last year for Steve Hughes to take over the reins at Cardiff-based Principality, receiving 2017 remuneration of £347,000. He will also receive further ‘awards’ this year and next under an executive rewards package.
The Mail on Sunday probe, based on analysis of executive pay at 27 building societies with December 31 year ends, comes as millions of customers are given the opportunity to have their say on the matter.
A raft of building societies have just sent summary 2017 financial accounts to savers and borrowers, inviting them to vote on key issues including directors’ remuneration. This is ahead of their annual general meetings which take place during the course of this month.
Although the vote on directors’ pay is non-binding, a big ‘anti’ vote can send a clear signal to the board that there is mounting disquiet over executive greed.
Unlike banks, building societies are effectively owned by their customers – so-called ‘members’. So, making profits is not the be all and end all. There are no shareholders to keep happy, which should mean – in theory at least – that customers get a better deal and executives do not receive mega bonuses.
Many Skipton customers have already indicated to The Mail on Sunday that they have voted against Cutter’s £1 million package. John Dawson, a 64-year-old retired baker from Preston, is ‘disgusted’ with Cutter’s rewards. He is planning to go to Skipton’s annual meeting on April 23 to register his anger.
He says: ‘I have only missed one annual meeting at Skipton since 2000. I find it disgusting that Cutter can receive such largesse when the society last year closed eight branches and some agencies. The society is there to serve customers, not aggrandise the chief executive.’
Another member of nine years’ standing, said: ‘Entrepreneurs who take risks to create successful businesses, wealth and employment deserve every reward they get. The chief executive of Skipton is not in this category.
‘This is a crass and insensitive move by a board that appears to have forgotten the interests of customers. It overshadows the society’s improving performance under Cutter’s leadership.’
Lone voice: Darina Armstrong of Progressive
On Friday, Skipton told The Mail on Sunday: ‘The remuneration of executive directors reflects the strong performance of the group during 2017 – record profits, strong growth in membership, mortgage and savings balances.’
It added: ‘The pay of all executive directors is benchmarked against the marketplace to ensure it is appropriate in comparison to peers and competitors, and sufficient to attract and retain people with the skill and capability needed to run a complex and diversified business, encompassing more than 9,500 employees. Pay is set by a remuneration committee comprising independent non-executive directors who are supported by external professional advisers.’
Dawson urges customers who wish to make a stand against soaring building society pay – not just at Skipton – to use their annual general meeting vote carefully.
If they opt for a ‘quick’ vote, he says it will simply mean them backing all the society’s proposals including support for the directors’ remuneration. They should therefore avoid this option in favour of voting on each specific resolution.
Analysis of building society 2017 accounts also confirms a dearth of female representation in the boardroom, especially among executives. There is currently only one female boss among the country’s 44 building societies – Darina Armstrong at the aptly-named Progressive.
It is a shame it is only one of two building societies which refused to provide The Mail on Sunday with accounts.