CYBG could face shareholder unrest over executive pay following Virgin Money deal
Virgin Money’s new owner CYBG could face an investor backlash after a respected shareholder advisory group slammed its executive pay plans which it said are “not supported by compelling rationale”.
The report by advisory group ISS said that following the acquisition of Virgin Money for £1.7bn last year, the company plans to nearly double variable pay opportunities for its top executives in 2019.
CYBG plans to boost bonus opportunity from 110 per cent of salary to 118 per cent of salary for chief executive David Duffy, and 117 per cent for chief financial officer Ian Smith while the value of long-term incentive plan (Ltip) grants will jump from 100 per cent of salary to 177 per cent of salary for Duffy and 176 per cent of salary for Smith.
ISS said the variable packages as a percentage of salary appear “reasonable for a company of this size” it said that “the underlying salaries are relatively high… which in turn implies significant increases to bonus and Ltip opportunities”.
Duffy's basic salary for 2019 is £1.02m, while Smith's is £510,000.
ISS said the acquisition of Virgin Money did not justify the mooted executive pay hike, noting it is still not clear whether the transaction will deliver additional shareholder value and noting that “the company's share price has declined significantly since the deal was approved”.
CYBG was contacted for comment.