In July 2016, Theresa May launched her Tory leadership bid with a speech in Birmingham, pledging radical corporate governance reforms. She proposed giving workers and consumers seats on company boards, but business groups quickly killed off the plans, leaving only meagre changes. Now, a decade later, a challenge from a Nationwide customer could revive the debate.
Member-Nominated Director Bid
Nationwide building society will hold its annual general meeting on 15 July, where one of its customers, James Sherwin-Smith, is vying for a boardroom seat. This is a significant moment for the 142-year-old mutual, as only three member-supported candidates have been elected to its board in living memory. The last, Paul Twyman, retired in 2002, leaving no member-nominated directors on any UK building society board today.
Challenges in the Nomination Process
Sherwin-Smith spent nearly two years gathering over 250 peer nominations, as member details were withheld due to data rules. Signatures only counted if nominators maintained minimum balances or loans of £100 or £200 over two years. He described the process as unexpectedly difficult. Andrew Johnston, a professor at Warwick University, noted that Nationwide likely does not want him on the board due to potential awkward questions.
Corporate Governance Concerns
Unlike listed banks such as Barclays, Lloyds, and NatWest, Nationwide does not face shareholder scrutiny, only regulators and members at virtual-only AGMs. Johnston warned that insulation from outside pressure could lead to groupthink and poor decision-making. Sherwin-Smith has criticized Nationwide for not holding member votes on major decisions, such as the £2.9bn Virgin Money takeover in 2024 and a 43% pay rise for CEO Debbie Crosbie, pushing her maximum package to £7m.
Opposition and Support
Gareth Thomas, chair of the all-party parliamentary group for mutuals, expressed concerns that inexperienced members might seek demutualisation for personal gain. The Building Societies Association chief executive, Sara Harrison, emphasized that board candidates need skills and expertise beyond mere membership. Sherwin-Smith countered that members are capable of electing directors and rejected demutualisation, aligning with Nationwide's stated position.
Election Process and Board Stance
Nationwide has not confirmed whether Sherwin-Smith must unseat an existing director or if he will receive remuneration. The board may recommend against his election, which could hinder his chances, as members can use a one-click quick vote to endorse all board recommendations. Monica Franco-Santos, a corporate governance academic, warned this gives the board powerful control over member votes. Nationwide defended the quick vote system, stating it has been used for over 20 years and members value its convenience.
Nationwide emphasized its strong membership involvement, with all directors elected annually and a duty to act in members' interests. It noted market-leading customer satisfaction for 14 years and growing membership. The outcome of Sherwin-Smith's bid could set a precedent for corporate democracy in the UK.
