Directors get £1m merger pay-off

Sep 16 2008 by Alistair Houghton, Liverpool Daily Post

CHESHIRE Building Society chief executive Karen McCormick is to get a £224,000 pay-off as part of £1m in compensation being paid to directors of the Cheshire and Derbyshire building societies following their merger with Nationwide.

The move is likely to draw criticism from members of the two mutuals, who will not receive any windfall payments from the deal with Nationwide because of their poor financial positions.

The shock merger at the start of last week left 15m savers and borrowers without the chance to question or vote on the deal.

According to a report released yesterday, a total of six directors are contractually entitled to a year’s pay for loss of office.

The full cost of buying the building societies' directors out of their contracts increases to about £1.6m when Derbyshire's former chief executive Peter Richardson and ex-finance director Geoffrey Windebank, who left their jobs last year, are included. Nationwide said in a statement: "Directors will not receive more than their statutory entitlement and under the Building Societies Act.

“ They are not allowed to receive remuneration in direct relation to the merger."

Under the terms of the mergers, Nationwide's £179bn of assets and 900-strong branch network will absorb Derbyshire's £7.1bn of assets and 50 branches, and Cheshire's £5bn of assets and 45 branches.

Neither transaction was instigated by the Financial Services Authority, although the regulator has been kept up to date of developments.

laurasharpe