Shareholder adviser warns Clydesdale owner over executive pay hikes

ISS says long-term incentive payments for CYBG’s chief executive and finance director would almost double this year, bringing with it the potential for an investor backlash as it remains unclear whether the merger would deliver additional value.

David Duffy, CYBG’s chief executive, could receive a bonus of up to 118 per cent of his £1 million salary and long-term incentive awards of 177 per cent, giving him a total of £4 million. He earned a total of £2 million last year.

ISS, which has recommended that shareholders vote against the company report at the annual meeting on January 30, said: “While the success or failure of the Virgin Money transaction will not be known for some time … the company’s share price has declined significantly since the deal was approved.”

The stock is down 38.7 per cent since October and closed at 195.7p on Friday, valuing the company at £2.8 billion.

The takeover will lead to the loss of 1,500 jobs as part of a £120 million cost-saving programme.

CYBG, now the sixth-largest bank with 6 million personal and small business customers, told The Times newspaper that it kept executive pay under “constant review”.

“We have consulted widely with shareholders on the proposed changes, which bring us more in line with market norms.” Increases in performance-related pay “will only be achieved through stretching long-term targets”, it added.