Metro Bank PLC suffered a significant setback at its annual general meeting on May 21 when a substantial number of investors opposed the pay report and re-election of Chairman Vernon Hill and other directors.
More than 20% of investors opposed the remuneration report and more than 12% voted against the re-election of Hill. Around 10% voted against the re-election of CEO Craig Donaldson and some 11% opposed CFO David Arden.
In a further indication of investors' unhappiness with the composition of the board and doubts over the independence of directors, more than 28% voted against the re-election of Stuart Bernau and Eugene Lockhart while more than 20% voted against the re-election of Anna Melis.
The bank said it was "disappointed that some of our shareholders opposed these resolutions" and promised to engage constructively with investors over the coming months.
Leading institutional investors Legal & General Investment Management and Royal London Asset Management had publicly revealed ahead of the meeting that they would oppose Hill's re-election on the grounds that he was not independent. Investor advisory groups had also recommended investors oppose or abstain over Hill's re-election and the remuneration report.
Metro's share price has plummeted since it announced in January that it had made a mistake in classifying the riskiness of its loans. As a result, the lender had added £900 million to its risk-weighted assets, forcing it to boost its capital buffers — and last week it raised £375 million in equity.
Metro is being investigated by the Bank of England's Prudential Regulation Authority and the Financial Conduct Authority for the error.
'A humbling experience'
Hill, speaking at the bank's AGM in London, described the past few months as "somewhat of a challenge" while Donaldson said the past few months had been an "extremely humbling and chastening experience."
Shareholder advisory service Pensions & Investment Research Consultants advised investors to vote against Hill while Institutional Shareholder Services, another shareholder advisory group, said investors should vote against the remuneration report and abstain on the re-election of Hill.
Norway's sovereign wealth fund bought a 3.1% stake in Metro on Friday, the day after the bank had its equity raising. Metro shares traded up around 7.5% at the close of London trade on May 21.