Metro Bank shareholders have been urged to reject the lender’s pay report and withhold support for its chairman and chief executive as investors take action over a recent accounting error.
Influential shareholder advisory firm ISS has recommended that investors vote against Metro Bank’s pay report, saying a £288,000 bonus for finance chief David Arden is “not considered appropriate, given the recent shareholder experience”.
Metro Bank shares have lost 75% of their value since the accounting blunder was revealed in January. ISS has also taken issue with the fact that Arden received a full pay packet, despite joining Metro part way through the 2018 financial year.
In addition, ISS is recommending shareholders abstain from voting to re-elect four Metro Bank directors, who it says are responsible for the blunder. They include its founder and chairman Vernon Hill, as well as chief executive Craig Donaldson, who has given up his £800,000 bonus over the debacle.
Abstentions are also recommended for the re-election of Gene Lockhart and Stuart Bernau, the respective chairs of Metro’s risk and audit committees.
Directors are coming under pressure as Metro counts the losses linked to the accounting mishap. The lender confirmed in January that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators were wrongly classified as being less risky than they really were.
The high-profile mistake has prompted investigations by the Financial Conduct Authority and Prudential Regulation Authority, and the exit of some of Metro’s biggest customers.
PwC is facing criticism as well, with ISS recommending that shareholders abstain from voting on the accounting group’s reappointment as Metro Bank’s auditor, having served in the role for a decade. Metro Bank declined to comment.
The recommendations raise the pressure on Metro Bank, with another shareholder advisory firm Glass Lewis having recommended a vote against Vernon Hill’s re-election as well as its remuneration report.
It is the second year running that Metro Bank has been braced for a shareholder backlash. Last year, the lender dodged an investor rebellion over multimillion pound payments to the architecture business of Shirley Hill, the wife of Metro’s chairman.
