Private Investor: For the democratic voting options, read the pale grey print

Click to follow

According to a mailing I received from the Britannia Building Society, "throughout history people have fought for voting rights. Whenever you have the opportunity to cast your vote on anything these days, it's a good idea - however busy your life is - to at least give it some thought". Indeed it is, and I have been giving the various bits of paper sent to me by building societies recently more scrutiny than, I imagine, they usually receive from busy members. What I found was rather disturbing.

So let's kick off with the Britannia, shall we? Laudable, indeed noble, as the society's expressed views on democracy are (perhaps they've recruited Tony Benn as a copywriter), the ballot paper for the election of directors and other society business does not quite live up to those lofty ambitions.

For the normal ballot paper, wording is overlaid by a "Quick Vote" guide in bright red ink. It sounds helpful and innocuous: it is not. The red arrows invite you to appoint the chairman of the meeting as your proxy, which in turn, in this case, also means that you hand over to the chairman your voting rights on the resolutions before the society.

The proper voting options, which detail the names of the would-be directors in all their glory as well as the routine resolutions on auditors - approving the annual report and giving the nod to the Directors Remuneration Report - are printed in a rather pale shade of grey below, easily ignored.

The organisers of this election (ultimately the society's directors) have opened themselves up to the charge that they have designed the ballot paper to get the result they want. People may have fought for voting rights but oh how easy it is for those in power to undermine them, to skew them to their own ends. Not, presumably, because they anticipate much trouble brewing at this particular AGM, but because at some point they will be faced with one of those tiresome attempts to a elect an independent director or demutualise the society or, just possibly, an attempt by ordinary members to hold the directors to account, although I agree that is at the remote end of possibilities.

Elizabeth Walmsley is one of those standing for election to the board. She is a 51-year-old non-executive director of the Britannia, and got £34,000 for her trouble last year. She says that "at Britannia we believe in excellent communications. The success of our business is dependent upon our openness with our members, so we aim to talk clearly, honestly and in plain English". I do hope she's had a good look at the ballot form on which her name appears.

Building society members should be allowed to vote on a more neutral ballot paper. So I praise the Yorkshire Building Society and the Chelsea Building Society for printing forms that are clear and unbiased. It can be done, see?

The Britannia is a big society by today's standards; but size isn't everything when it comes to being canny. The tiny Hinckley and Rugby Building Society sends its members a modest little mailing befitting its limited resources. By contrast with the Britannia, its voting paper is a model of democratic openness.

However, what they are very shy about is telling the members, how much each executive and non-executive director of the society is paid. Just a little detail would suffice, but no, that's too much trouble for the Hinckers and Ruggers. Instead they simply declare that "directors' remuneration for executive and non-executive services totalled £540,000 (2002: £512,000)" and that if you'd like a closer look you'll have to toddle off to a branch.

So the Hinckley and Rugby, which has assets of £555m, and made a profit of £2.1m in 2003, has need to pay its directors more than half a million pounds. The Britannia, with assets 40 times larger at £20.9bn and profits 30 times larger at £65m, paid its directors £1.8m, only about three times what the Hinckley and Rugby paid. Directors' pay at the Hinckley and Rugby, let us be clear, represents one quarter of the society's profits for the year. Ker-ching! The mutuals aren't as cuddly as they make out. I don't want to see them all turn into Plcs, but in many ways the rights that are given to Plc shareholders seem superior to those granted to mutual members in building societies. Did someone say fat cat?

s.o'grady@independent.co.uk

Looking for credit card or current account deals? Search here

Comments