Royal London Asset Management has warned Metro Bank it will block reappointing its chairman over payments of more than £21m made to his wife’s company.
RLAM has expressed concerns over millions in payments for architectural, branding and marketing services to InterArch, a firm run by wife of Metro Bank chairman Vernon Hill.
The Independent reports that InterArch received £4.6m from Metro Bank in 2017 alone.
RLAM holds a £13.6m stake in the bank, and has put it on notice that it will oppose both Hill’s re-election and that of the bank’s audit committee at Metro Bank’s annual general meeting on 24 April.
Royal London’s head of responsible investment Ashley Hamilton Claxton says: “In a year when large corporate failures dominate the headlines, boardrooms should pay especially close attention to related party transactions, such as the payments by Metro Bank to InterArch, owned by the wife of the bank’s chairman, for design and branding services.
“We question whether Metro Bank’s audit committee has been sufficiently rigorous in its scrutiny of the payments made to InterArch.”
Metro Bank’s audit committee defended the InterArch contracts in its annual report as “at least as beneficial as those which could be obtained in the market from an alternative supplier”.
Last year, RLAM used its shareholder influence over advertising giant WPP to challenge executive pay at the firm.