NATIONWIDE Building Society’s recent accounts showed that grotesque executive salaries - and bonuses - are still alive and kicking.
What a pity the old mutual ideals have all but disappeared - a ‘not-for-profit’ institution serving the community by providing a combination of affordable mortgages and competitive savings rates.
By doing just the opposite, many society chief executives are now rewarded handsomely – £1.9 million in the case of Nationwide’s Graham Beale.
Back in the good old days, building society employees were rewarded for loyalty; the longer you remained in their employ the more you received by way of salary. Most employees were satisfied with this approach as it provided security and a career path.
But matters have changed for the worse. Profit related pay is now all the buzz while most societies are keen to take over rivals, in the process enabling executives to enjoy even higher salaries because of their greater responsibilities.
Such a desire to merge and get bigger is endemic within the financial services industry. All the banks went for critical mass. The result was that they got too big, with literally millions of customers and investors. With such huge numbers the risks these businesses carried passed back to the government and, of course, ultimately to the tax payer.
The rub comes when there is simply no one else to takeover or merge with. Will the executives of building societies and banks then reduce their bloated salaries back to acceptable levels? I doubt it.
I think we could learn from the ‘Quaker’ work ethic which is all about spreading the benefits amongst those who help to achieve success. It is great pity the financial services industry has lost sight of this worthy ethic.