The boss of the UK’s largest construction company is taking a huge pay cut to show solidarity with staff and customers in the pandemic.
Joe Garner, who is the chief executive officer of Nationwide, sacrifices about £ 1.2 million in wages, pensions and bonuses.
He is the first boss of a large financial institution to volunteer for a pay cut after the Bank of England wrote to the heads of all the big banks – including RBS, Barclays, HSBC and Lloyds – on Tuesday telling them to stop their dividends and curb high wages.
Nationwide does not pay dividends as it is a construction mutual owned by its 16 million members and not listed on the stock exchange. However, Garner quickly responded to a letter from Sam Woods, a senior bank official last week.
The national supremo has volunteered to return one fifth of its base salary and pension for the coming year, which equates to a reduction of £ 228,000.
The 50-year-old also told the mortgage lender’s compensation committee that he did not wish to receive a performance bonus for the past financial year.
Its most recent award under this program was just over £ 1 million. Garner received a total of £ 2.37 million for 2019, which is lower than that of other top bankers.
Nationwide CEO Joe Garner sacrifices approximately £ 1.2 million in wages, pensions and bonuses during the coronavirus crisis
Garner is the first boss of a large financial institution to volunteer for a pay cut after the Bank of England (pictured, Governor Andrew Bailey) wrote to leaders of all major banks on Tuesday say to suspend their dividends and control Pay
The coronavirus crisis “could push unemployment levels in the United Kingdom and the United States beyond the record number of the Great Depression of the 1930s”
Unemployment from the coronavirus crisis could be worse in a few months than during the Great Depression of the 1930s, warned a former Bank of England official.
David Blanchflower said unemployment is increasing at the fastest rate in living memory as job losses rise worldwide and in the United Kingdom.
He warned that there has never been a concentrated business collapse on the scale seen in recent weeks, as the government forced all non-core businesses to close.
In March, 10 million people in the United States claimed unemployment benefits, while in the United Kingdom, the total number of unemployed reached 2.75 million in June.
During the Great Depression, unemployment reached 24.9% in the United States and 15.4% in the United Kingdom, over several years.
His package consisted of a base salary of £ 885,000, a retiring allowance of £ 299,000, travel and benefits of £ 185,000, plus £ 1.01 million of a bonus related to performance, part of which is deferred for up to seven years.
His decision to forfeit much of his potential rewards came after discussions with Mr. Woods at the Bank.
In a heavily written letter to the chief of Nationwide, Woods made it clear that he expected the construction company to pay no cash bonus to senior executives, warning that he would use his powers to enforce it “If your group did not agree to take such a step”.
However, Mr. Garner was determined to act on his own volition. He is believed to have felt that, given the pressures on members and regular staff, many of whom fear being able to pay their mortgage payments in the coming months, a reduction in his rewards was the right option.
He is also believed to have been influenced by the fact that Nationwide has had to make tough decisions in response to the virus, including withdrawing mortgages for anyone who cannot bear at least 25%. He is also abandoning his plans to offer banking services to small businesses.
Last week, Garner approached the pay committee, chaired by Sky executive Mai Fyfield, and told them he wanted to cut his package. The committee agreed on Friday.
Nationwide does not make compulsory layoffs among the 18,000 employees who work at its 650 branches. It does not provide for voluntary dismissals. The other major banks have not yet specified their plans for executive bonuses.
Antonio Horta-Osorio, CEO of Lloyds, who did not receive a cash bonus, made £ 4.7 million last year and Barclays rival Jes Staley made $ 5.9 million pound sterling. RBS boss Alison Rose was paid £ 1.4 million. The banks have agreed to stop £ 8 billion in dividends owed to shareholders.
Bosses of other big banks MUST follow suit, says RUTH SUNDERLAND
Big bank bosses should follow Joe Garner’s lead and volunteer immediately to forfeit some of their lavish salaries and bonuses.
The Prudential Regulation Authority has made it clear that it does not expect banks to pay cash bonuses to its executives and traders for this year.
The city watchdog also expects them to think very long before making any other incentive payments or share awards.
Yet, so far, there has been a deafening silence – with the honorable exception of Mr. Garner of Nationwide – on the question of whether these wealthy men and women are indeed willing to give up some of their enormous salary.
Person wearing mask walks past Bank of England during coronavirus pandemic
Is it fair to expect them to take a hit in the wallet for a crisis that was not, for once, their own?
It is unlikely that the bonuses will be huge this year, as the balance sheets will be marked by billions of pounds of bad debt.
But this is not the question. At this time of great national crisis, the leaders of our lending banks must show solidarity and a sense of community.
They must show their sensitivity to the fact that the rest of the country is in agony and that the economy is on the brink.
And they must show their support for the thousands of their own low-paid workers who take risks by braving the epidemic to maintain branches and call centers.
The pandemic is an opportunity for our banks and their leaders to redeem themselves once and for all for the damage they inflicted on us, our innocent victims, during the financial crisis.
Giving up some of their rewards would be a symbolic gesture more than anything else – but gestures and symbols can be very powerful. If there was ever a time for our major lenders to show us that they care, now is it.