The board of Leek United has been forced to call a special general meeting in which the fate of the troubled building society will be decided.
Leek’s 60,000 members have been sent voting packs urging them to vote against the hostile takeover bid by Murray Financial.
However, Ken Murray, chief executive of Murray Financial Corporation, said that voting in favour of the takeover would guarantee a better future for the Society. He said that so far the society had seen a collapse in profits of 36% and an increase in directors’ pay packets of 130%.
But Neil McFadden, Leek United chief executive, explained the headline rates as being a conscious bid to reduce profits as a result of a profit efficiency policy introduced in 1996.
He said: “We downsized to return value back to our members and have so far returned £1.4m to them in the form of better rates.
“Directors’ pay has increased annually by an average of 6%. Over the last six years, on the retirement of non-executive directors, we have appointed three general managers to the board. This has meant that their salaries, previously classified under employees’ pay, are now classified under directors’ remuneration. This figure of 130% implies that members of the board have had their pay doubled.”
Appointments to the board include both a sales and finance director which were previously non-board appointments.
Should the takeover go ahead, Murray said that Leek United would be converted into a much larger corporation through the acquisition of more building societies, with a focus on the development of internet banking.
He said: “This will be great news for members of Leek United who will have the opportunity to benefit from windfalls. It is also great news for the town of Leek which will have the opportunity to benefit through increased wealth and jobs in the area.”
The special general meeting will take place on 3 December.