Metro Bank chairman gains shareholder backing despite payments controversy
The lender has paid around £21 million to an architecture firm owned by the chairman’s wife.
Metro Bank chairman Vernon Hill has dodged a shareholder rebellion despite investor concerns over multimillion-pound payments to his wife’s architecture firm.
Mr Hill saw 96.3% of shareholder votes cast in favour of his re-election at the company’s annual general meeting in London on Tuesday, with one investor coming to his defence.
Shareholder Richard Harris hit out at the likes of Royal London Asset Management – a fellow investor – and advisory firm Glass Lewis for bringing what he claimed was unwarranted attention to millions of pounds doled out to Shirley Hill’s business InterArch for architectural design services as well as branding, marketing and advertising.
Close to £4.6 million in fees was paid by Metro Bank to InterArch in 2017.
The lender has now shelled out around £21 million to Mrs Hill’s firm, based on accounts filed between 2010 and 2017.
Those opposed to the transactions have said it potentially created conflicts for Metro Bank’s directors, and could impact on decisions over service contracts.
“They’ve tried to cause some reputational damage unnecessarily,” Mr Harris said during the AGM.
“I find it difficult to understand why anyone should criticise the chairman and his wife for the really wonderful work that they’ve done,” he said, adding that advisory firms like Glass Lewis should instead focus on “the misconduct in the banking sector”.
“They want to focus on what is a minor matter,” Mr Harris said.
When asked whether Metro Bank could sidestep future questions about its relationship with InterArch by either reducing payments or putting the contract out for tender, Mr Harris disagreed and said the success of the lender had to do with the Mr and Mrs Hill working together from the start.
He added: “You can’t turn around 10 years later and say: ‘We should put that out for tender, even if someone can do it for half the price.’
“This thing’s just expanding – look at number banks we have got compared to three years ago and you will see why – they pay more because there’s been a huge … amount of work.”
The lender has defended its use of InterArch services, saying the audit committee had a “strong review and bench marking process” in place, which was conducted by independent third parties to ensure that the terms were favourable for the bank.
Metro Bank’s remuneration report – which also came under fire ahead of the AGM – was approved with 93.5% of votes cast in favour.
Royal London – which holds a 0.44% stake in Metro Bank worth £13.6 million – said earlier this month it was voting against the report due to a lack of transparency around performance targets for executive pay.
Another advisory firm, Institutional Shareholder Services, (ISS) backed Mr Hill, but had urged investors to vote down the remuneration report following a “significant salary increase” for chief executive Craig Donaldson – who in total took home £1.5 million in 2017, an increase on £1.3 million for 2016.
As of April 1, Mr Donaldson’s basic salary rose from £650,000 to £750,000.
Metro Bank has said that Mr Donaldson’s pay rise followed a “comprehensive review” of the value he brought to the company.