A decade after Theresa May's pledge to reform corporate governance, a Nationwide building society customer's bid for a board seat is testing the limits of member democracy. James Sherwin-Smith, a 45-year-old advocate for governance overhaul, has secured enough nominations to stand for election at the mutual's annual general meeting on 15 July.
Building societies are among the few UK sectors where customers can legally nominate board candidates, but the process remains arduous. Sherwin-Smith spent nearly two years gathering over 250 peer nominations, hindered by data rules that prevented access to member details. Signatures were only valid if nominators maintained minimum balances or loans of £100 or £200 over two years.
No member-nominated directors currently sit on any of the UK's 42 building society boards, according to the Building Societies Association. Only three such candidates have been elected to Nationwide's board in living memory, with Paul Twyman's retirement in 2002 marking the last time a member-nominated director held a seat.
Andrew Johnston, a professor of company law at Warwick University, suggests Nationwide may resist Sherwin-Smith's candidacy. 'I suspect they don't want him on the board because he's going to just ask lots of awkward questions,' he said. The lack of member representation, he warns, creates a 'danger of groupthink' among management insulated from outside pressure.
Nationwide, which has over 6,500 members on a talkback panel, says it engages with members through various channels. However, critics argue this panel functions more as market research than genuine democratic oversight. The outcome of Sherwin-Smith's challenge could reignite debates about corporate democracy that have simmered since May's 2016 speech.
