Nationwide, the UK's largest building society, surprised the market yesterday with the announcement that its chief executive, Brian Davis, will step down at the end of the year.
Mr Davis's early retirement follows his controversial decision this year to slash mortgage rates for existing as well as new customers, which has led to a slump in Nationwide's new business and attracted a raft of criticism from others in the financial services industry.
Separately, the building society unveiled the results of the ballot for board members ahead of today's annual general meeting. The vote showed that the two rebel candidates who have tried to force the society to change many of its rules failed to gain election.
Mr Davis, 57, yesterday denied that he had been forced to fall on his sword for the decision on mortgages and said Philip Williamson, the current retail operations director who will become the new chief executive, backed the policy.
"I haven't dictated policy at Nationwide. The whole board, including Philip, endorsed the change on mortgages and he will continue with it," Mr Davis said.
Mr Davis, who has been chief executive of Nationwide for seven years, was paid £768,000 last year, a relatively high sum among building society leaders. His pension will be published in next year's accounts.
While Nationwide's stance on mortgages is widely seen as fair, as existing customers are given the same access to attractive deals as new borrowers, the strategy has so far not succeeded in attracting many customers. Ray Boulger, senior technical manager at the financial advisers John Charcol, said: "I expect its new business to be about 6 per cent this year, compared to 9 per cent last year."
The building society, which has received serious challenges by carpetbaggers before, said that the mortgage policy was part of its pro-mutual message and pointed to its victory in yesterday's vote over board members as evidence that argument has succeeded.
Andrew Muir, one of the members who tried to gain election to the board in a bid to force conversion, gained just under 470,000 votes, compared with nearly double that number when he stood in 1998. At that time, Nationwide was forced to hold a separate vote on conversion and only won by 1.6 per cent of the votes.
Yesterday's vote was based on proxies sent in by 1.8 million of Nationwide's six million members who are able to vote. Alan Debenham, another member, also failed to be elected. Nationwide's four existing directors were all re-elected with polls of 1.2 million to 1.3 million votes each.
Demutualisation would have unlocked windfall payments estimated at upwards of £500 for each member. Earlier this month demutualised life insurer Friends Provident made its market debut on the London Stock Exchange, giving its 1.7 million members payouts of at least £450 each in shares.Reuse content