Nationwide chiefs in bonus dispute

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The Independent Online
THE 100 most senior executives of the Nationwide Building Society are each about to collect thousands of pounds in bonuses because a fall in customer complaints has triggered an unusual new incentive scheme.

Some of the society's staff, who do not qualify for the bonus, claim the payout of up to 10 per cent is largely the result of a freak barrage of complaints in the previous year.

Tim Melville-Ross, the chief executive, stands to receive up to pounds 22,000 on top of his pounds 220,000 salary through the complaints bonus scheme, one of four different bonuses that senior executives can collect.

The Nationwide, Britain's second biggest building society with 8 million customers, sparked thousands of complaints in 1991 when it stranded millions of savers in obsolete accounts paying a low rate of interest.

In a policy that has since been discontinued, it failed to notify savers that they could be earning more in new accounts and then penalised those who tried to switch.

In the following financial year, which ends today, complaints have fallen back. It is understood the top executives are likely to receive at least 6 per cent on top of their salaries.

The scheme was set up in March 1992 and Sir Colin Corness, chairman, admitted that the absence of complaints about obsolete accounts had helped to trigger the bonus. 'It is part of it, but only part of it,' he claimed. Complaints about other issues, such as long queues and delays in replying to letters, had also declined.

Brian Davis, operations director, said only complaints about service were included in the bonus calculation. Protests about obsolete accounts were classified as policy complaints.

Staff morale is at a low ebb, according to an internal survey by the society. It points to a marked lack of confidence in senior management among the 12,000 staff.

Some 70 per cent of the 2,200 respondents think change has been badly managed. Fewer than half feel OK or happy to work for the society, and 54 per cent think the society has changed for the worse over the last two years.

Sir Colin said: 'I don't think there has been a decline in morale in the people I deal with. I'm not the person to talk about morale among people on the counters.'

Although the annual report only discloses one bonus plan - a medium-term scheme based on profits over three years - the senior executives can increase their salaries by up to 30 per cent in three other ways: their own personal performance; the financial performance of the society; and the complaints bonus scheme.

Financial performance has been lacklustre. Nationwide is expected to reveal another fall in full-year pre-tax profits, after the 29 per cent decline to pounds 202m that it reported last time, when it was hit by pounds 236m of sour loans.

The society has been plagued by embarrassments over the last year. It vacated its costly head office in London just six months after moving in. It sacked its corporate strategy director, John Hutchinson, three days after relocating him to the new headquarters in Swindon. It then lost its finance director and deputy chief executive, Daniel Hodson.

(Photograph omitted)

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