Metro Bank is under fire for granting a £60 million share reward to its executives, sparking public outrage and criticism.
Rewritten Article:
London-listed Metro Bank is facing heat for a controversial pay plan proposal, with top executives potentially earning up to £60 million each. According to our sources, Institutional Shareholder Services (ISS), an influential proxy adviser, has urged investors to vote against Metro Bank's remuneration policy and Shareholder Value Alignment Plan (SVAP) at their annual meeting on May 20.
ISS, in a report to clients (accessed by our team), voices concerns about the SVAP's potential to deliver excessive rewards. ISS emphasizes that performance is only measured based on total shareholder return, which may not accurately reflect management performance. The financial adviser also states that Metro Bank has failed to present a compelling case to justify the remuneration plan.
In a separate Money article, the industry regulator floated the prospect of annual water bills as high as £2,000.
Money headlines:
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- Energy customers secure compensation for overcharging error
- Money: £2,000 annual water bills could become a reality, Ofwat warns
The maximum payouts for Metro Bank executives will only be triggered if the bank's stock reaches 437p – nearly 4 times the current trading level. It's worth noting that in 2020, Metro Bank came perilously close to collapsing, prompting a private bailout of the high street bank, which was established post-2008 financial crisis.
Despite its troubled past, Metro Bank's financial and operational performance has shown marked improvement under Daniel Frumkin, its current CEO, as per this week's trading update.
Metro Bank defended its remuneration committee's approach, asserting that it "fully aligns with shareholder interests and the creation of shareholder value over a sustained period." A source close to the company revealed that the maximum payouts would only be realized if the bank hit key performance milestones over a five-year period.
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- The maximum payouts for Metro Bank executives might not be realized before 2025, as the stock price needs to reach 437p, nearly four times the current trading level.
- Investors are being urged to vote against Metro Bank's remuneration policy and Shareholder Value Alignment Plan (SVAP) at the annual meeting on May 20, due to concerns about the SVAP delivering excessive rewards.
- It's essential to question whether Metro Bank's remuneration plan, which is purely based on total shareholder return, necessarily reflects effective management performance.
- As of now, it is not necessarily a given that the finance sector will have to bear the burden of high water bills in 2025, as proposed by the industry regulator, but the possibility remains a topic of discussion and concern.
