Irish Nationwide Building Society members have shot down a proposal at its annual general meeting (agm) to earn a windfall by converting the institution into a public limited company (plc).
At its agm in Dublin yesterday, member Shane Hogan tabled a motion calling on the board to go ahead immediately with the process of converting the society into a plc rather that waiting for a legal change that would allow its immediate sale.
However, more than 80 per cent of members rejected the plan. At the end of the meeting, chairman Michael Walsh announced that they had voted against the motion by 19,051 to 4,444.
Converting it into a plc under the existing legislation governing building societies would mean that not more than 15 per cent of the company could be sold to one party for five years from the date of conversion.
At the meeting, Mr Walsh advocated waiting for a proposed change in the law that would allow building societies to change status and sell their entire share capital immediately to just one buyer.
He argued that this would maximise value for shareholders, whereas making the move immediately could result in them losing more than 20 per cent of that value.
Proposing the motion, Mr Hogan said members had nothing to lose by supporting it. "This resolution will give you a choice, you have no choice at the moment," he said.
He warned that continued delays would result in the value of individual members' windfalls being diluted as more people joined and qualified to benefit.
Mr Hogan also questioned a proposal by chief executive Michael Fingleton that staff get a 15 per cent share. He suggested that this could result in a €10 million payout to Mr Fingleton alone and could cost members an average of €2,000 each.
However, after the meeting Mr Fingleton said he was not proposing that staff get as much as 15 per cent. Another speaker at the agm said that he favoured staff getting a share of the windfall and was applauded by the majority of people present.
Mr Hogan also pointed out that the Oireachtas had yet to publish the legislation, and predicted that it was unlikely that it would be passed during the current term, which ends in July.
He warned there was no way of predicting when the law would be passed. "I am just concerned that it will go on and on and we will be left waiting," he said.
Mr Fingleton told the meeting he was confident that it would be passed. Afterwards he told reporters that he believed the legislation would be published next month.
He said the society was in talks with financial services ombudsman Joe Meade in relation to the society's charges for early repayment of fixed-interest loans.
Irish Nationwide dropped a High Court case against Mr Meade's office recently that related to that issue. Customers who paid these charges are now likely to seek repayments. Mr Fingleton said that the cost would not be material to the society's accounts.
