Details of chief executive’s reward package also published
The Co-operative Bank has said it will not pay bonuses worth £5 million to former executives after it announced losses of £1.3 billion for 2013.
The employer will cancel outstanding deferred bonuses for executives who left the bank after it nearly collapsed last year when a £1.5bn hole was discovered in its finances.
News of the cancelled bonuses comes as the bank apologised to its customers saying it did not expect to make a profit this year or in 2015.
Pay details for the bank’s chief executive Niall Booker were also published revealing that he will collect a £2.9m remuneration package, including a basic salary of £1.2m with up to £1.7m in performance related bonuses. He could also receive as much as £1.2m under a three-year incentive scheme determined by future business performance.
Booker said: "We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk.
"I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times."
The Co-op Bank separated from its parent company the Co-operative Group in December 2013 and was taken over by a group of US hedge funds.
But the Co-op Group also faced controversy over its remuneration deals for top executives recently when news that its former HR director Rebecca Skitt was due to receive a payoff worth £2m was leaked to the press last month.
Reward packages for the whole leadership team came under fire as the group’s remuneration committee recommended increasing the total wage bill for the team to £12 million a year because they faced a “complex” job. It said the increase would ensure salary levels that were appropriate for an organisation of the Co-op’s size.
It was proposed that chief executive Euan Sutherland should receive a base salary of £1.5m this year with an additional £1.5m retention payment.
With pension contributions and other rewards, for example the compensation paid for buying him out of his previous contract, Sutherland is set to receive £3.66m this year. In comparison, the previous chief executive Peter Marks took home £1.3m last year.
However, the row over remuneration levels dubbed ‘reward for failure’ by commentators led to Sutherland ‘s eventual resignation as he said the group was “ungovernable” in a post on the organisation’s Facebook page.
And earlier this week, former City minister Lord Myners, who was leading a review of the business, resigned his seat as an independent director on the board.
Early findings from his review said elected directors had overseen "breathtakingly value-destructive" decisions. He warned that too many directors lacked the serious business experience needed to call senior managers to account properly.
However, despite quitting the board, Lord Myners said the group still had a "good future" if it did "the right things on governance and leadership".