RUTH SUNDERLAND: The LV hierarchy has forgotten that it is there to serve the members – it’s time for those members to make their voices heard again
- There are more than a million members of LV
- At the annual meeting, members may vote against paying Mark Hartigan
- LV needs a complete reset in the interests of its members
Members of mutuals and building societies do not have much power as individuals. However, together they can take on bad boards and reverse bad strategies.
That’s exactly what happened with insurance company LV, whose members refused to give the green light to a self-serving plan spearheaded by interim CEO Mark Hartigan to sell the mutual to private equity.
Turnout at a special session in December to decide the proposed deal with US buyout baron Bain Capital was not huge at 15 percent, but it was the highest for LV in living memory.
Have your say: There are more than a million members of LV and they need to make their voices heard again
The sell-off and greed of LV bosses have awakened a sleeping giant: member power.
Not content with trying to force through a sale to private equity, the insurer has added insult to injury by proposing a bonus of more than £500,000 for Hartigan, the architect of the doomed sale plan.
Details of his rewards were published in the annual report, along with a payment of more than £45,000 to so-called experts from Deloitte for advising the pay committee. That was money for old ropes when any sane person could have told the board for nothing that it was unscrupulous to hand Hartigan any bonus.
There are more than a million members of LV and they don’t need to stand by and be treated with such shameless contempt. Also need members of the Skipton Building Society and other mutuals whose inflated rewards my colleague Jeff Prestridge revealed in the Mail on Sunday (see related article link below).
At LV’s annual meeting, which is expected to be held in September, there is an opportunity to vote against Hartigan’s pay and to table a motion of no confidence in him.
Compensation votes are advisory only, but send a strong message nonetheless.
Allowing members to attend the annual meeting in person is an opportunity to quiz the board from the stage or in a virtual format in the case of an online meeting.
From the start, Hartigan’s tenure has been disastrous, on a scale that would be ridiculous were it not so damaging to members’ interests. He adamantly argued that the Bain deal was necessary because LV did not have a bright future as an independent company.
In a quick turnaround, we’re now told that commercial performance is improving. LV now appears to be “at a place where it could move forward and successfully compete in the marketplace as a dynamic, sustainable, mutual brand.” Both attitudes cannot be right. No doubt the argument from the LV camp is that circumstances have changed, but that’s no defense.
The whole point of reciprocity is that it’s a long-term one, and not just a gimmick that has to be given up at the first hint of trouble – or, as one might suspect, the smell of potential rewards for top bosses.
It’s ridiculous that Hartigan would even stay in the top spot at LV, let alone get a bonus. For the good of its members, LV needs a complete reset, beginning with the appointment of a heavyweight chairman like Joe Garner, outgoing Nationwide boss, or pensions champion Baroness Altmann. That person must then immediately recruit a credible CEO.
LV directors claim that through the Bain debacle, we “have listened, learned, and know we need to better engage our members going forward.”
The reality is that board members have tin ears. They seem to have forgotten that she and Hartigan are there to serve the members, not the other way around. Time for LV members to make themselves heard again.
RUTH SUNDERLAND: Time for LV members to make their voices heard again
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