Outgoing Virgin Money boss set for bumper payday despite bank’s plunge in value
David Duffy stands to have made up to £30m from his tenure as chief executive of Virgin Money by the time he retires from the role after six years following the bank’s takeover by Nationwide.
The 62-year-old banker could be set for a more than £11m windfall if Virgin Money’s board allows him to receive all 5m shares tied up in his long-term performance plans, according to analysis by The Sunday Times.
His total pay could shrink to £25m if Virgin Money only releases half the shares to him – in line with performance metrics from previous years.
On Wednesday, Virgin Money shareholders will vote on whether to approve its £2.9bn tie-up with Nationwide. The deal, first announced in March, stands to be the UK’s biggest banking merger since the financial crisis. It requires at least 75 per cent approval from investors.
Shareholders will also be asked to approve a full £1.1m payment for Duffy, due monthly, in lieu of notice if he takes a non-executive director position at another firm.
Duffy would currently have to lower his monthly instalments by the amount he received from the other role.
Influential proxy advisor Glass Lewis has recommended that shareholders reject this proposal while backing the wider deal with Nationwide.
Duffy’s tenure has seen his firm’s market capitalisation drop by roughly £1bn since he, then leading Clydesdale and Yorkshire banks, bought Virgin Money for £1.7bn in 2018 and used its name for the combined group.
Some analysts and investors have criticised the bank’s management for not driving a harder bargain from Nationwide. Its 220p per share bid represents a a 38 per cent premium to Virgin Money’s stock price immediately before the offer period but a 35 per cent discount relative to the value of the bank’s mortgages and other loan assets.
Other figures used to calculate Duffy’s total pay include £1.2m in salary and benefits each year, £5.5m in annual bonuses and a £1.3m reward in 2019 for helping to create CYBG in 2015.
The bank, which has 7,300 staff, is also planning to pay a total of £10m in retention bonuses to 50 “key employees” below senior leadership level, wherein they will receive up to six months’ pay to stop them leaving Virgin Money amid “potential uncertainty” from the tie-up.
Virgin Money declined to comment when approached by City PM