I have a series of opened envelopes on my desk in front of me, all from building societies telling me that it’s time to cast my votes to approve their accounts, approve the directors’ remuneration and elect my directors.
It’s pretty frustrating. I am pleased that we still have mutually owned building societies after the demutualisation madness twenty years ago. I support the idea of the societies being member-owned. I want to use my votes.
And yet democracy is not on the agenda. Not one of the building societies offers me a contested election for the board. The days when there were candidates for building society boards – particularly at the Nationwide – who were unendorsed by the existing board (and who were generally put up by the grassroots Building Societies Members Association) have passed. The BSMA now seems a very small little affair, unfortunately.
Of course, building societies are complex financial institutions and we need competent directors. But that doesn’t necessarily mean that the only suitable board members are those initiated into the magic circle of non-exec directorships and who hold accountancy qualifications or have spent their lives in banking or finance. It’s frustrating how few directors mention in their election addresses that they support mutuality, for example.
On the other hand, my relationship with the societies of which I am a member is also pretty much solely a transactional one. Although I do try to save with some of the smaller societies, I am fickle in my favours, tending to look above all at the interest rates being paid and nothing much else.
So I will vote, but I will vote without enthusiasm. And I will vote will no clear sense of how mutual organisations such as building societies can at this late stage in their development ever really be once again genuinely member-owned and member-responsive.
I’ve been casting my vote in an election and it’s not been an easy matter. The election is for three members of the board of the Phone Co-op, and there are ten members of the co-op putting themselves forward, many of them clearly strong candidates.
Not easy to decide, but what a nice problem to have! What a refreshing change from those fake elections for board places on building societies, for example. The Phone Co-op does not pay its non-exec directors particularly lavish fees (directors received just over £1200 a year, last time I looked), but nevertheless its elections are consistently contested and usually – as this time – attract a strong field of candidates.
Good corporate governance? Give that co-op a tick.
This is the time of year when I am invited by the building societies in which I have savings to participate in their democratic life. It’s, frankly, not much of an invitation. Building societies may be technically member-owned, but the ballot paper which comes round invariably allows me to vote (or decline to vote) for exactly the number of directors for which there are vacancies. It has been many years since I have been aware of contested elections for the boards of any of the major building societies and even more years before an ‘unofficial’ candidate not supported by the existing Board was elected (this was at the Nationwide some twenty years ago).
The usual device used by building societies is to bring in a new director by co-option, who then serves until the next annual election – at which point of course their name is added to the ballot paper in an uncontested election. It is, I’m sorry to say, a poor recipe not only for democracy but also for building society diversity and renewal.
So my heart sinks when the annual report and ballot arrives from the Ecology Building Society, and I find that the Ecology has followed industry norm: no contested election for the board and a new director brought in mid-year as a co-optee who we now have to endorse. The Ecology this week announced strong performance results, and I am pleased at their success. They also hold attractive green-themed AGMs which usually have good attendances. But I would be even more pleased if the board proactively worked to attract more candidates than places in future board elections.
Incidentally, the small and dedicated (if sadly all too powerless) Building Societies Members Association is still going after more than thirty years of campaigning for some real member engagement in societies. They have recently been trying to help get independent candidates on to ballot papers, not an easy task. They deserve to be commended for their perseverance.
I was contacted last week by the PR person at the Ecology Building Society who told me that the Ecology now had accreditation under the Fair Tax Mark. I emailed back to ask if the Ecology, a small building society with all the financial regulatory regime it is required to abide by, could actually avoid paying its taxes even should it want to, Fair Tax Mark or not. I can’t somehow see the Ecology with its single office in the West Yorkshire town of Silsden opening up, say, a Channel Islands offshoot as once upon a time an ex-building society named Northern Rock chose to do.
My email response was a little unkind. The Ecology, set up by a group of activists at the time when it was just about possible (with a lot of hard work) to start a new building society from scratch, has gone on to do good things. And the Fair Tax Mark (very much a creation from within the cooperative movement) is a useful propaganda vehicle when so many companies appear to feel that UK Corporation Tax is a voluntary commitment that they may or may not decide to meet.
Britain’s most important member-owned business is, arguably, the Nationwide Building Society, one of the very few large building societies to have evaded the mania for demutualisation at the turn of the century. So we should be interested, I think, in who Nationwide has appointed as its new Chief Executive. He is, as today’s papers report, Joe Garner, who is currently running BT’s broadband and technical operation Openreach.
Garner’s background includes a stint as a senior executive at HSBC, as well as at Dixons Stores and Procter and Gamble. Does he understand mutuality? Well, perhaps we can take some comfort from the carefully prepared Nationwide press release where he is quoted as saying “The fact that as a mutual it is owned by its customers means that it is uniquely placed to lead and succeed in the next chapter of retail financial services in the UK. I look forward to listening and learning from members and employees alike…”
Do I need to remind you that Nationwide’s roots were in the cooperative movement (it was the Co-operative Permanent society before it became Nationwide) and for several years in the late twentieth century Nationwide’s member democracy was more active than that of most building societies, with member-nominated candidates even making it through the voting system on to the society’s Board of Directors a couple of times. More recently, Nationwide has settled down into filling vacant directorships through cooption and only subsequent member endorsement and it’s a long time since I remember a contested election. But at least Nationwide’s mutual rhetoric remains, which is more than can be said of some firms in the mutual sector.
Joe Garner is also a keen triathlete. This is irrelevant to how good he will be as a Chief Executive, but somehow gives me irrational encouragement.
In the past few days I have exercised my member’s right to vote for board members of both Leeds Building Society and MEC, the Canadian outdoor equipment cooperative retailer (if you’re asking, I’ve been a MEC customer a number of times while visiting Canada).
Leeds Building Society offers the usual unsatisfactory British building society experience of having uncontested Board elections. MEC by contrast has a lively democracy: ten candidates for three board places. Admittedly only a small percentage of the membership tends to vote (last year 47,000 members voted out of several million), but I reckon it’s a cooperative member’s responsibility to do so… even if I do live several thousand miles from MEC’s head office. I hope I’ve voted for candidates who will help MEC continue to thrive.
I have just been invited to take my part in the Nationwide Building Society’s democratic process. Or in other words, the voting paper for the 2014 AGM has arrived in the post.
I will vote, of course, but I can’t say I’m very excited by the prospect. The way member control operates in the Nationwide (as in so many other larger building societies) is not an attractive one. We are invited to endorse – or otherwise – the board members already in place. There are no alternative candidates to select.
The board is, in short, a self-perpetuating one. In years where board vacancies occur new directors are co-opted and only subsequently presented to the membership for endorsement. This may well produce a board with some of the right professional competencies, but it doesn’t suggest an organisation where members’ voices can really be listened to.
Actually, Nationwide is interesting because there was a time back in the 1990s when independent candidates regularly stood against board nominees and were actually elected to the board on (from memory) three occasions. I remember covering the news when the first independent, Sheila Heywood, was successful in her election. Some of this interest by activists in the Nationwide was historical, coming from the fact that Nationwide was originally the cooperative movement’s building society.
Recent times have seen attempts at direct member candidacy in building society elections wither away (leaving aside for a moment the Ecology). It’s a pity. It’s also directly relevant to the debate at the Co-operative Group on future governance arrangements since Lord Myners’ recommendations propose a very similar arrangement for board elections as building societies.
In the meantime, back to my voting paper. I see that Nationwide’s chief executive Graham Beale has target remuneration of £2.31m for 2014/15, with a possible maximum of £2.74m. Curiously, these amounts are given by Nationwide in the booklet to members as £2,312K and £2,749K – is this because somehow that way they seem less gigantic?