The pressure on Virgin Money has increased over the £2.65 million it paid its boss last year after an influential investor adviser expressed unease about the package.
Institutional Shareholder Services has told its clients that “shareholders may question the link between pay and performance” in the share awards that vested for David Duffy, the Virgin Money chief executive.
It comes after Pensions & Investment Research Consultants, another shareholder advisory group, recommended that investors oppose the bank’s pay report at a vote at Friday’s annual meeting because of the overall size of Duffy’s pay relative to the earnings of the average employee of the bank.
ISS said that Virgin Money’s pay report warranted “qualified support” at this week’s vote, but that this was “not without concern”.
Virgin Money is Britain’s sixth biggest high street bank and has been run by Duffy, 62, since 2015, when it was called Clydesdale. He led the lender through its spin-off from National Australia Bank on to the London Stock Exchange in 2016 and orchestrated its £1.7 billion takeover two years later of Virgin Money, whose name it took.
Advertisement
Duffy has come under pressure in recent months after last year’s pre-tax profits fell by 42 per cent to £345 million. This led some in the City to question whether his job was under threat.
The stock awards that have drawn the scrutiny of ISS accounted for £1.1 million of Duffy’s pay package for 2023 and were linked to the bank’s performance in the three years to last September against a series of financial and non-financial targets. Duffy was granted 41 per cent of the maximum available under the scheme, with two of the financial measures and three of the non-financial targets contributing to the payout.
“Some shareholders may question why some of the non-financial metrics paid out in full, given that only two of the financial elements paid out at all,” ISS said. “In the round, some shareholders may question whether there is a significant deviation between pay and performance, given that 27 percentage points of the 41 per cent of maximum outcome came from the non-financial metrics.”
A spokesman for Virgin Money said the bank was “pleased” that ISS had recommended that shareholders support all its resolutions at the forthcoming meeting, “with the vast majority of investor votes cast already supportive on remuneration”.
