Virgin Money boss David Duffy under fire as profit targets are ditched while his pay packet doubles to £2.7m
Virgin Money boss David Duffy is under scrutiny from shareholders after delaying profit targets while seeing his pay packet double.
Sources told The Mail on Sunday some shareholders have become increasingly ‘disgruntled’ with the bank’s performance since the £1.7 billion merger in 2018 with Clydesdale and Yorkshire Banking Group (CYBG), previously owned by National Bank of Australia.
Shares in Virgin Money – Britain’s sixth largest bank – have halved from a £3.64 peak in 2018 to £1.78. Duffy saw his pay more than double to £2.7 million in the year to the end of September, boosted by the vesting of a share-based scheme. He received just 12 per cent of his potential bonus.
Virgin Money boss David Duffy (pictured) saw his pay more than double to £2.7m in the year to the end of September, boosted by the vesting of a share-based scheme
But it is understood some shareholders are annoyed that the bank has watered down and deferred its statutory profit target and weakened other performance goals. A source close to the bank said the new targets have no relation to his pay.
In 2019, Duffy – who was chief executive of CYBG when it struck the deal to acquire Virgin Money – said he would generate more than 12 per cent return on equity by 2022.
But Virgin Money’s latest annual results, published in November, reveal that this target has been kicked back to 2024 and been diluted to 10 per cent. A source said: ‘The Australians [shareholders] are the disgruntled ones.’
Shareholders will be raising questions about why the bank is only now devising a plan to focus on its digital services, the source added.
Ian Gordon, analyst at Investec, said the markets were ‘seemingly unimpressed’ by the bank’s annual results, even though it posted a £417 million profit and reversed a loss from the previous year.
He said ‘a delay in delivery’ of cost reductions and further material restructuring costs were to blame.
Virgin Money has made numerous branch closures, and said in September that it would shut a further 31 early this year – incurring a £25 million restructuring cost.
Gordon said the bank is now suggesting its cost base will remain the same during its 2022 financial year, rather than be reduced.
Luke Hildyard, of the High Pay Centre, said: ‘£2.7 million was the median pay award for a FTSE 100 boss last year so it might be considered excessive for a smaller FTSE 250 firm, particularly given the deferral of performance targets and the economic uncertainty that remains due to the pandemic.’
Virgin Money said its 2021 financial performance ‘was strong’ and that it has a strategy to become ‘fully digital’ with ‘clear targets’.