Institutional Shareholder Services (ISS), a prominent proxy advisory firm, has advised investors to reject Metro Bank's executive pay report, citing concerns over a complex bonus scheme known as the Shareholder Value Alignment Plan (SVAP). This marks the second consecutive year the firm has opposed the bank's compensation practices. The vote, scheduled for June 2nd, is advisory, meaning it will not legally bind the bank's decisions, but represents a significant signal to the board.
The core of the criticism rests on the SVAP's linkage of executive remuneration primarily to the bank's share price performance. Shareholder advocates argue this structure allows for substantial payouts irrespective of the actual operational success or management's effectiveness in running the bank. This approach is reportedly "significantly out of line" with prevailing market standards and raises questions about transparency in how non-financial performance targets are measured and awarded.
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A spokesperson for Metro Bank defended the executive compensation structure, stating it is "fully aligned with shareholders' interests and the creation of sustainable, long-term value in the interests of all stakeholders.” However, advisory firms like ISS have expressed reservations, questioning the transparency surrounding non-financial performance metrics tied to executive rewards. The maximum potential payouts are understood to be contingent on the bank's stock price increasing substantially, potentially up to four times its current value, over a five-year period.
Historical Context and Shareholder Concerns
This situation echoes similar controversies from May 2025, when Metro Bank faced backlash over proposed bonus payouts potentially reaching £60 million or €70 million. At that time, ISS had also recommended investors vote against the remuneration policy and SVAP. The bank's share price performance has been a key point of contention, with concerns that the SVAP rewards executives based on stock market fluctuations rather than demonstrable management skill.
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While reports indicate improvements in financial and operational results under Chief Executive Daniel Frumkin, the advisory firms maintain that relying heavily on share price targets does not inherently reflect management's performance. The current share price is noted to be around 110p, with bonuses reportedly requiring an increase above 120p within three years for a grant made in May 2025. Both ISS and rival proxy advisor Glass Lewis have previously recommended shareholders reject bonus schemes tied to such share price mechanisms, suggesting they could lead to "excessive, and potentially unwarranted, windfalls." The vote on June 2nd will thus serve as a critical indicator of shareholder sentiment regarding executive compensation at Metro Bank.
