12th June 2015
Last month we wrote an open letter to the Co-op Bank about the excessive pay package the bank’s Chief Executive, Niall Booker, is in line to receive. Save Our Bank supporters also contacted the bank in their hundreds, and the open letter was featured in a Guardian article, raising the pressure on the bank further.
Following a discussion with the bank, they have provided a response to our open letter, which we’ve reproduced in full below. We appreciate the bank responding to our concerns directly.
They are continuing to defend the super-sized CEO pay package, saying Niall Booker “had other opportunities” and wouldn’t have taken the job for less. They are also emphasising the full £4.97m is “based on exceeding a set of stretching performance targets” linked to the success of the Bank’s turnaround plan. They hint that Niall Booker’s successor would not need the same specialist skills and hence might be paid less.
Thank you for lobbying the bank on this and helping to push the issue to the top of the bank's agenda.
The bank’s statement is as follows:
"We understand customers’ concerns but please be assured that our decisions and pay policy are driven by what we believe is best for the Bank, our customers, our shareholders, our staff and the wider community within which we operate.
“We all share the same collective desire - to build a sustainable bank committed to the values and ethics that sets us apart. We have always been clear that having the right people at the top leading the business is critical to achieving this and to completing the turnaround plan and returning the Bank to health.
“The current executive team was brought in to turn the Bank around and we needed to appoint people with the right level of specialist skills. The contractual arrangements entered into when the Chief Executive joined the Bank reflected this and were made at a time when he had other opportunities.
“As our Chairman said at the time of our annual results, The Co-operative Bank's survival was in doubt in June 2013 ahead of the new management team joining the Bank. The fact that we're here, without costing the tax payer a penny, and now have the chance to return the business to health is in no small part due to our CEO's leadership.
“The full details of the remuneration policy are outlined in the Bank’s Annual Report and Accounts. The Chief Executive did not receive a bonus in 2014 as his fixed pay was a combination of salary and role based allowance.
“Both our CEO and the Remuneration Committee of the Board decided that, under the new contract, which applies from June 2015 until the end of 2016, remuneration should be more clearly linked to the success of the Bank’s turnaround plan. This means that the fixed element of remuneration will comprise a much lower proportion of the overall package.
“The figures quoted in the media refer to the maximum level that could be earned, based on exceeding a set of stretching performance targets, tied to a full range of key performance metrics. Less than half of this (43%) comprises the fixed element, with the majority (57%) of the Chief Executive's compensation being variable, and dependant on these targets being exceeded.
“The figures quoted by the media refer to the total package, assuming these challenging targets are not only met, but exceeded. They are not therefore a like-for-like comparison with the remuneration of other bank CEOs.”