Metro Bank risks shareholder revolt over pay increase for top bosses

theguardian.com:

Metro Bank is at risk of a shareholder rebellion over executive pay, after an influential investor advisory firm said the high street lender had failed to justify a “significant” 20% salary hike for top bosses.

Glass Lewis – which helps shareholders including large pension funds and asset managers decide how to vote at annual general meetings – urged investors to vote against the bank’s remuneration report amid concerns over rising payouts for the chief executive, Daniel Frumkin, and the newly joined chief financial officer, James Hopkinson.

“Absent a sufficiently compelling rationale, we cannot recommend that shareholders support this proposal at this time,” Glass Lewis said.

It comes after Metro Bank offered Frumkin a 20% hike in his base salary, saying his pay was “increasingly out of line with others in the market” and that he was playing a crucial role in reviving the bank’s fortunes, after it was rocked by an accounting scandal in 2019.

While Frumkin has waived the increase by a year – meaning it will take effect from January 2024 – it will take his base pay from £769,600 to £925,000 next year. Frumkin was paid £1.3m for 2022, including bonuses.

Glass Lewis noted that the 20% hike was far above the average 5% salary rise granted to staff for 2023.

“Glass Lewis views high, fixed pay rises with scepticism, as such remuneration is not directly linked to performance and may serve as a crutch when performance has fallen below expectations,” Glass Lewis said in its report, adding that large increases in base salaries can have a “compounding effect” on executive pay, since bonuses are often granted as a percentage of base salaries.

The proxy firm also raised concerns about the pay offered to Metro Bank’s new chief financial