Virgin Money bosses could be at risk of an embarrassing investor backlash, after an influential adviser hit out at a £2.6m package for its chief executive, David Duffy, saying it was “not appropriate” compared with the bank’s average employee.
Pensions and Investment Research Consultants (Pirc), which advises shareholders including UK local authority pension funds, also raised concerns over what it said was “a lack of board-level accountability for sustainability issues” at Britain’s sixth largest lender.
Pirc is urging investors to vote against two resolutions at Virgin Money’s AGM on 1 March, when the lender will ask for backing for its annual report and pay report. The pay report explains how a dedicated committee of board members decided on the final payouts for bosses, based on their performance over the last financial year.
The shareholder adviser said it was concerned over the level of Duffy’s package, which includes a £331,000 bonus, and is 37 times higher than the average Virgin Money worker, who earns £71,804 a year.
“The ratio of CEO pay compared to that of the average employee exceeds the recommended limit of 20:1 and is therefore not considered appropriate,” Pirc said.
Median pay figures – which calculate the mid-point of the range of salaries at the bank – suggest an even larger gap. According to Virgin Money’s annual report, the chief executive’s total payout was 66 times that of the £40,254 earned by the median employee.
A shareholder rebellion would be a blow to the FTSE 250 bank, which just last year passed its pay policy with 98% approval. It would also be an embarrassment to Duffy, who has run the banking group since 2015, before Clydesdale and Yorkshire Banking Group launched its £1.7bn takeover of Virgin Money in 2018.
The Pirc report comes after Virgin Money revealed a 42% drop in annual pre-tax profits in November, as it was forced to put aside £309m to protect itself against potential defaults.
The lender also announced last summer that it would shut 39 of its branches, accounting for nearly a third of its network, in a move that put 260 jobs at risk. It has left about 90 branches across the UK.
Virgin Money defended its pay decisions, saying a statement that “offering competitive remuneration packages to senior leaders is essential to secure and retain talented individuals, with pay outcomes in line with the group’s remuneration policy, which was approved by c.98% of shareholders at the February 2023 AGM and benchmarked against industry”.
The bank added that its board “has oversight of climate change risk and holds our business to account, with clear governance in place and strategic goals aligned to ESG [environmental, social and governance] objectives.
“We are advocates of ESG transparency with robust targets, tracking and disclosures in our annual report and included on a dedicated sustainability hub on our website.”
