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Cheshire Building Society chief executive Karen McCormick,
Cheshire Building Society chief executive Karen McCormick,

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Will bosses be grinning like Cheshire cats?

by Chris Morris
17/ 9/2008

MEMBERS of Cheshire Building Society, who won’t receive a penny from its merger with Nationwide, have called for heads to roll after hearing executives remain in line for big bonuses.

The merger between banking giant Nationwide and the Macclesfield-based mutual left the borough’s 17,065 loyal customers, who were not consulted on the move, without a windfall payment. Jobs will also be lost.

Yet bosses could still be in line for an annual ‘performance’ related bonus under the terms of their employment contracts.

But this could be simply rubbing salt into the wounds of many of Cheshire’s 440,000 members, some of whom claim they are being "laughed at behind their backs".

Chief executive Karen McCormick, whose wage bill topped £224,000 in 2007, will be staying on in a non-board role when the Nationwide absorbs the Cheshire.

Pensioner Michael Clark, of Park Lane, Macclesfield, has banked with the Cheshire for more than 30 years. His family has entrusted their hard-earned cash with the Cheshire since the early 1920s.

The retired sales rep, 66, said: "I’m flabbergasted. I was thinking of writing a letter anyway. Considering that she (Karen McCormick) has overseen the demise of the institution, she should resign now."

The grandfather-of-three added: "They are laughing behind our backs. It’s incredulous – the whole financial world is in turmoil. None of the directors should be in for a bonus of any sort."

Jean Jones, 73, of Gawsworth, – who worked for the Cheshire as a secretary – added: "She should not get a bonus and she should resign."

The possibility of a bonus adds to the sour taste left in the mouths of Maxonians who missed out on £650 in 2006 when the Portman Building Society bid to take over the Cheshire failed.

In an ironic twist, the Portman was swallowed up later in that year by the Nationwide and customers DID bank a cash windfall.

"The reasons you put two businesses together is not for windfall payments but because it’s the right thing to do," said a Cheshire spokesman.

And a spokesman for the Nationwide added: "They (the directors of the Cheshire and Derbyshire building societies) will be allowed their statutory contractual entitlements."

It is, however, illegal for any of the top dogs at the Castle Street-based mutual to receive a bonus purely from the merger, as outlined in the Building Societies Act.

Karen McCormick will stay on at Nationwide "up to and including 12 months" but an exact timeline was not clarified and it is unknown how long she will be in the new role or if she will be offered a new job with Nationwide.

The Cheshire’s CEO wasn’t paid a bonus in 2007 but did get an £80,000 performance bonus in 2006, and could be line for a similar bonanza this time round.

What is known is the directors of the 45-branch wide Cheshire are on a 12 month rolling contract and if bought out of their employment deal, a severance package is likely to be on the cards.

But a spokesman said: "We will have to cross that bridge when we get to it".

Members demanding answers will be sent a merger notification statement in mid-October detailing the reasons behind the shock marriage of the Cheshire, Derbyshire and the Nationwide. Again, it is unknown if the leaders of the Macclesfield company – the 11th biggest building society in the country – which has £4.9 billion in assets, will detail their yearly pay packet and bonuses.

But this information will definitely be disclosed two to three months after the unification is completed in late 2008 in what is known as the ‘cessation accounts’.

A spokesman for the Cheshire added: "The cessation accounts will detail remuneration packets of the directors and board members along with the annual accounts – much like the annual statement. This usually happens two to three months after the merger has been completed, which will be later on in the year."

  • Background: The firm, which runs 13 estate agents and 45 branches in the North West, is blaming the merger on the property market slow-down and a £11.5 million commercial loan which went sour after an "exceptional impairment charge" resulted in a £10.5 million loss. The pressure of shouldering the massive debt meant the board had to approach the UK’s largest building society to join forces. The Cheshire’s 45 branches, £4.9 billion assets and 440,000 members will now become part of the Nationwide although it will keep the name and brand. Customers will be able to continue to use the Macclesfield-based mutual’s outlets but not Nationwide’s services or branches. The deal is expected to be completed by mid to late December.

  • WHAT DO YOU THINK? Drop us a line at Letters Page, 37 Chestergate, Macclesfield, Cheshire, SK11 6AL or email us at macclesfieldexpress@menwn.co.uk or visit our website at www.macclesfield-express.co.uk


    • | Submit CommentSubmit Comments | View CommentsView Comments(2)


    Most recent 2 of 2 user comments

       Wind fall payments are usually made when societies ditch their mutuallity.

    Is this happening here? No, they are all staying mutual.
    slinkywizard, Macclesfield
    18/09/2008 at 14:59
       Executive directors who were happy to pick up bonuses when times were good should have the decency to apologise for their failure (now, that would be a novelty, wouldn't it?) to run the Cheshire properly and give up any contractual right to any payment on top of salary. Their salaries alone will represent a small fortune to most Macc people. It is not enough to blame market conditions or bad debts. If the Society had been properly managed during the past few years by the Board and the executives, it would have survived the current economic climate. And bad debts are avoided by prudent lending policies. I retired from the Cheshire 5 years ago after 25 years and I am confident that the Chief Executives who ran the Society before McCormick and her immediate predecessor would have ensured this situation never arose.
    Quiggers, Malta
    17/09/2008 at 21:42
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