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Metro Bank chairman faces shareholder revolt over £21m to wife’s firm

Written by: Owain Thomas
Royal London is protesting Metro Bank’s continued multi-million pound use of the architecture and design firm owned by the wife of chairman Vernon Hill.

The insurance and asset management giant has pledged to vote against the reappointment of Hill as its chairman at the bank’s annual general meeting (AGM) on 24 April.

It added it would also be voting against Metro Bank’s remuneration report and the reappointment of the chairs of the audit and remuneration committees.

According to accounts, Metro Bank has spent in the region of £21m with InterArch, owned by Shirley Hill, for design and branding services since 2010.

Metro Bank disputed the concerns noting it had consulted shareholders, and said it ensured it was getting favourable terms for the InterArch work.

History of family transactions

In a statement released ahead of the AGM, Royal London raised serious concerns about Hill’s history of previous transactions with family members when in the US and questioned clarity around pay awards for senior personnel.

Royal London Asset Management head of responsible investment, Ashley Hamilton Claxton, said: “In a year when large corporate failures dominate the headlines, boardrooms should pay especially close attention to related party transactions such as the payments by Metro Bank to InterArch, owned by the wife of the bank’s chairman, for design and branding services.

“We question whether Metro Bank’s audit committee has been sufficiently rigorous in its scrutiny of the payments made to InterArch. Our concerns about these transactions is heightened by the history of related party transactions between the chairman and members of his family, while he was serving as a director in the US.

“In light of this, we’ll be voting against the reappointment of both the chairman and the chair of the audit committee at Metro Bank’s AGM this year.”

Claxton continued: “Meanwhile, Metro Bank’s attitude towards pay looks opaque at best.

“The company has failed to disclose performance measures on which executives are being judged by, and thus remunerated on, despite a previous commitment to disclose these.

“We’ll therefore be voting against the firm’s advisory remuneration report, along with the chairman of the firm’s remuneration committee,” he added.

Consulted shareholders

In response to the statement, a Metro Bank spokesperson, said: “We consulted with shareholders ahead of setting out our remuneration policy and believe the performance measures used to calculate the executive directors’ variable rewards are transparent and clearly articulated.

“The balanced scorecard used to calculate variable rewards for executive directors, as well as all colleagues, includes: financial, risk management, customer outcomes, and people and culture.

“InterArch provides architecture, design and branding services to the bank.

“The audit committee has strong review and benchmarking processes in place conducted by authoritative independent third parties to ensure the terms are favourable for the bank. This process has been in place since Metro Bank’s inception and is disclosed in our annual report.”

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