Nationwide’s £2.9bn Virgin Money takeover gets boost from AGM backing

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Nationwide’s £2.9bn takeover of Virgin Money has cleared a long-awaited hurdle after members of the construction firm gave the board overwhelming support at its annual general meeting.

More than 600,000 voters cast their ballots. Nationwide‘s board of directors backed them at its annual meeting on Wednesday, with each resolution — including board re-election and director pay packages — receiving approval of about 95 percent or more.

AGM is seen as a potential barrier before take over because lobbyists urged members to vote against all resolutions in protest of Nationwide’s decision not to put the deal to a vote of full-time members. Although members were not specifically asked to vote on the deal, the annual meeting was seen as a vote of confidence in the organization’s leadership.

Meanwhile, about 95 percent of voters approved tripling Nationwide’s CEO Debbie CrosbieThe maximum long-term bonus is £3.4m. Remuneration committee chair Tracey Graham said Crosbie’s pay was “significantly lower” than her peers at other banks and in the bottom half of the FTSE 100.

Wednesday’s meeting, which took place online, was open to Nationwide’s 16 million members, as customers with current or savings accounts or mortgages are known. As a building society, the lender is owned by customers rather than shareholders.

The Virgin Money TakeoverIt would be the biggest banking merger in the UK since the financial crisis, set to make Nationwide the second-largest provider of mortgages and savings accounts, and would give it a foothold in corporate banking.

In the most recent financial year, Crosbie took home £3.5m, including £1.7m in compensation for the bonus she lost when she left rival bank TSB.

Members also overwhelmingly approved a series of governance changes including giving Nationwide’s chairman the power to postpone meetings, removing the 70-year age limit for directors and abolishing a rule that excluded mentally ill directors.

Mikael Armstrong, who led the members’ campaign for a takeover vote, highlighted “growing discontent among members with Nationwide’s management” which he said was a sign of “the contempt they have shown” among members.

Despite the slight increase, the votes against the board represented only a small fraction of the membership. Nationwide Chairman Kevin Parry said fewer than 200 people attended the virtual AGM.

Armstrong, who claims he was “drained” by Nationwide in March, has collected more than 5,000 signatures on a petition calling on the building society to give its members a say in the Virgin Money takeover.

Protesters have spent months arguing that Nationwide is “acting contrary to the democratic spirit of a mutualistic society” and it is unclear whether customers will benefit from the deal.

Nationwide has insisted it has no legal requirement to put the deal to a vote, with Crosbie telling the Financial Times in May that only a “small number” of customers were opposed to the plan.

Regarding Armstrong’s “account cancellation” complaint, the construction company said it was fulfilling its legal and regulatory obligations and was “not aware of any instances where an account has been closed solely because of someone’s political comments or views.”

“Nationwide would never and has never withheld anyone’s money because of any legitimate views they may have,” Crosbie told members.