ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY

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ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
Annual Review 2020
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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                                  A welcome                            Another strong performance in a
                                                                       challenging year
                                                                                                                       to say how sorry we were that Catharine
                                                                                                                       French, who we appointed as a Non

                                  from your                            Once again I’m pleased to report a strong set
                                                                       of financial results, despite one of the most
                                                                                                                       Executive Director in April 2020, sadly
                                                                                                                       passed away in May.

                                  Chairman                             challenging years in our Society’s history.
                                                                       The consequences of the COVID-19
                                                                       pandemic and the economic impact of
                                                                                                                       You can find out more about the directors
                                                                                                                       you can vote for at the AGM and what they
                                                                                                                       bring to the Society on pages 19 to 23.
                                                                       leaving the EU are still uncertain. Although    As your Chairman I have responsibility for
                                                                       the vaccine rollout programme is well           ensuring we’re a well-run organisation
                                                                       underway and a trading agreement has            run in your interests. Maintaining a robust
                                  Our strategy is built around
                                  providing Real Help with
                                  Real Life                                 We’re in a strong position financially
                                  We do this by helping members
                                  secure a place to call home and      been reached between the UK and the             approach to support the long term success
                                  improve their financial wellbeing.   EU, there is some uncertainty around            and sustainability of the Society will remain
                                  We’ve been a building society        how effective these will be both in terms       the priority of the Board in 2021, to ensure
                                  for over 150 years and from the      of immediate impact and longer-term             we’re always doing the best for you.
                                  beginning we’ve been there for       challenges.
                                  those who trust us with their                                                        Thank you – for being a member
                                                                       We’re well placed to withstand these
                                  savings and their mortgages.         challenges and in a strong position             I’m really proud of our response to the
                                                                       financially. Mike Regnier, your Chief           pandemic and how we’ve helped our
                                  In 2020 being able to provide real
                                                                       Executive covers this in more detail with a     members and I’d like to thank you for
                                  help was crucial as we responded
                                                                       review of 2020 on pages 4 to 9.                 continuing to be part of our Society.
                                  to the challenges of the COVID-19
                                  pandemic - keeping members                                                           I would also like to thank our colleagues
                                  in their homes, protecting their     Changes to your Board                           for their commitment and professionalism
                                  savings and safely providing the     Your Board is here to represent you and         throughout 2020. Our colleagues make us
                                  essential financial services many    I’m pleased to welcome Mark Parsons, who        who we are and I’d like to thank each and
                                  needed.                              joins us with extensive building society        every one of them for continuing to deliver
                                                                       experience and knowledge. I’d also like to      an exceptional customer experience in
                                                                       thank Mark Pain who has stepped down            hugely challenging circumstances.
                                                                       from the Board and Gordon Ireland who
                                                                       leaves after the conclusion of this years
                                                                       AGM for all their valuable contributions        John Heaps, Chairman
                                                                       over the last few years. I would also like      23 February 2021

    Photo taken pre March 2020
    at Victoria Quarter, Leeds.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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                                                                                    Delivering our purpose of providing
                                                                                    real help with real life became even
                                                                                    more important in 2020, as the
                                                                                    COVID-19 pandemic created a
                                                                                    challenging environment
                                                                                    for our members,
                                                                                    communities and               The pandemic has highlighted the importance
                                                                                                                  of financial wellbeing and building savings to
                                                                                    colleagues.                   help deal with whatever the future holds.

                                                                                                                                                    We opened 227,000 savings accounts in 2020
                                                                                                                                                    and helped members access their money
                                                                                                                                                    when they needed to, by keeping our branches
                                                                                                                                                    and agencies open. With the Bank of England
                                                                                                                                                    rate reduced to an all-time low of 0.1%, this
                                                                                                                                                    continues to be a difficult time for savers.
                                                                                                                                                    Across the year our rates beat the market by
                                                                                                                                                    0.17%1 on average, that’s equal to £51m in
                                                                                    We’ve been here for our borrowers                               additional interest for savers.
                                                                                    and savers throughout 2020
                                                                                                                                                    The launch of our savings app came at just the
                                                                                    There’s no doubt that the pandemic has
                                                                                                                                                    right time and supported over 93,000 members
                                                                                    impacted every aspect of life, and the housing
                                                                                                                                                    to stay at home and transact digitally, through a
                                                                                    market has been no exception.
                                                                                                                                                    new and easy to use channel.
                                                                                    We’ve continued to provide the mortgages
                                                                                    people need to buy their homes and supported
                                                                                    over 39,000 customers that needed to take
                                                                                    a payment holiday, ensuring they can stay in
                                                                                                                                                         As a building society
                                                                                    their own homes.                                                     we’re able to share the
                                                                                    As one of the few lenders to offer 90%                               financial success of the
                                                                                    mortgages in 2020, we’ve seen some of the                            Society with our valued
                                                                                    busiest days in our history for people applying
                                                                                    for mortgages. So we’ve had to dip in and out                        members, by investing
                                                                                    of this type of lending to ensure our service                        in them
                                                                                    levels were impacted as little as possible, and

                                                             A review               to balance the number of applications we
                                                                                    received. All while continuing to support first-                A key element of our purpose

                                                              of 2020
                                                                                    time buyers to get on the property ladder.
                                                                                                                                                    is to deliver long term value for
                                                                                                                                                    our members
                                                                                                            In 2020 we                              I’m very pleased to say that our strong financial
                                                                                                            provided over                           performance has enabled us to increase the
                                                                by Mike Regnier,                            10,500 mortgages                        rates we pay to many of our most loyal savers.

                                                             your Chief Executive                           for people buying                       In January 2021 1.6m members received an
                                                                                                            their first home                        increase to their interest rates, at a time when
                                                                                                                                                    rates were at an all-time low.

                                                                                    	Y BS Group average savings rate compared to rest of market average savings rates based on savings stock from CACI’s Current
                                                                                    1
    Photo taken pre March 2020 at Victoria Quarter, Leeds.                            Account and Savings Database (CSDB). Data period January-November 2020.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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                                                                                                                                 We looked for new ways to continue to
                                                                                                                                 support communities in 2020
                                                                                                                                 We created and made available six online financial education
                                                                                                                                 sessions on our website and social media channels, to help
                                                                                                                                 support children and their families with home-schooling.

         High standards of customer
         service have become even
         more important
         Our Net Promoter ScoreTM, which is
         an independent measure of how
         satisfied our customers are with
         the services we provide and how
         likely they’d be to recommend us,                                                                                       We’re taking our financial education programme online in 2021
         increased to +532, up from +51 in                                                                                       and are aiming to reach 55,000 people by the end of 2022.
         2019. I’m particularly pleased we                                                                                       We’re also launching a programme in our heartland community
         were able to achieve this at a time                                                                                     of Bradford, to help 2,000 people improve their skills and
         when many of our members really                                                                                         find work - young people just starting their careers and those
         needed us the most.                                                                                                     without the right skills that need to upskill or change careers.

                                                                 In these challenging and uncertain
                                                                 circumstances, our colleagues have
                                                                                                                                                                                         Thank you for helping us,
                                                                 been brilliant
                                                                                                                                                                                         help homeless young people
                                                                 Every day I’ve heard stories of colleagues going
                                                                 above and beyond to support our members and                                                                             We continued to help homeless young
                                                                 one another. They are an absolute credit to the                                                                         people, launching a second bond for End
                                                                 Society and I’m incredibly grateful and proud of                                                                        Youth Homelessness, with both bonds raising
                                                                 them all.                                                                                                               a combined £248,782 for the charity. This
                                                                                                                                                                                         brought the total raised during our three-year
                                                                 To ensure we were able to continue providing
                                                                                                                                                                                         partnership to more than £1.1m and helped
                                                                 members with essential financial services, in March
                                                                                                                                                                                         over 550 vulnerable young homeless people
                                                                 a lot of our colleagues were able to start working
                                                                                                                                                                                         to have a safe place to call home. Our charity
                                                                 remotely from home. Our contact centres and the
                                                                                                                                                                                         partner for the next three years is Age UK.
                                                                 vast majority of branches and agencies remained
                                                                 open throughout 2020, enabling our colleagues to                                                                        Together we’re aiming to raise £1m to launch the
                                                                 continue to support and help members when they                                                                          Building Better Lives programme, strengthening
                                                                 needed it.                                                                                                              the financial resilience of thousands of older
                                                                                                                                                                                         people most in need.
                                                                 Colleague engagement rose materially in 2020 to
                                                                 make YBS a top-quartile employer for engagement
                                                                 in our industry.
                                                                 You can find out how we’ve been supporting our
                                                                 colleagues on page 18.

    	K PMG Nunwood Customer Voice Programme January – December 2020. Based on 26,529 completed interviews with
    2

      customers. Net Promoter Score and NPS are trademarks of Satmetrix Systems, Inc Bains & Company Inc., and Fred Reichheld.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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                                                                               Financially
                                                                               strong and
                                                                               well positioned
                                                                               Profit before tax for 2020 was £161m
                                                                               (vs £167m in 2019) and our core operating
                                                                               profit, which is a good guide to how
                                                                               profitable the Society is day to day, was
                                                                               £171m (vs £185m in 2019). This is a strong
                                                                               performance that we’re proud of given the
                                                                               challenges presented over the year. We
                                                                               have continued to focus on reducing our
                                                                               costs (down 5% year on year to £276m) and
                                                                               improving our efficiency, so that we can
                                                                               provide our members with value for money.

                                                                               We have good levels of capital reserves
                                                                               which help shield us from any financial
                                                                               uncertainties and protect our savers. We’ve

    We’re investing   In 2020 we completed a strategic review to ensure
                      our priorities continue to support our purpose
                                                                               also been growing our capital ratios over
                                                                               the past five years, with our Common
                      of providing Real Help with Real Life. As a result
      and adapting
                                                                               Equity Tier 1 ratio increasing to 16.7% in
                      we’re embarking on a major new transformation            2020 from 16.6% in 2019. This basically
                      programme. This will lead to significant                 measures our ability to absorb future losses

     for the future   improvements in both customer experience and
                      efficiency through investment in digital technology.
                                                                               and is much higher than the regulator’s
                                                                               current requirements. We have also chosen
                      We‘ve already launched our new customer savings          to carry higher levels of liquidity than in
                      app as part of this and invested in reducing the         previous years.
                      amount of paper we use , which also supports our
                      environmental commitments.                               All of this means that as a business, we
                                                                               entered this crisis from a position of
                      To ensure we’re delivering good value to our             strength and we’re set to achieve our aim
                      members as a whole we’ve also had to make some           of emerging even stronger.
                      difficult decisions. These include reducing our high
                      street network in areas where it is most concentrated,   Mike Regnier, Chief Executive
                      announcing plans to close 12 branches that all have      23 February 2021
                      other YBS branches or agencies within nine miles.
                      We also stopped offering face-to-face mortgage
                      advice in our branches, as the demand for this has
                      been decreasing for the last five years. Personal and
                      convenient mortgage advice is still available from
                      fully-qualified mortgage advisors by phone, which is
                      a popular option with our members.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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                                                                                                                                      Savings                            Our average

                                                                                                                                       227,000
                                                                                                                                            new savings
                                                                                                                                                                       savings rate was

                                                                                                                                                                      0.17%                  3

                                                                                                                                          accounts opened             higher than the
                                                                                                                                                                  market average of 0.62%

                                                                                                                                      Mortgages
                                                                                                                                        Provided more than
                                                                                                                                                                        best
                                                                                                                                        10,500
                                                2020
                                                highlights
                                                                                                                                      mortgages to help people
                                                                                                                                        buy their first home
                                                                                                                                                                  Overall Mortgage Provider
                                                                                                                                                                  at the Moneynet Personal
                                                                                                                                                                       Finance Awards

                                                                                                                                      People
                                                   Another strong year,
                                                  supporting our savers,                                                                  2,200
                                                                                                                                        volunteering hours
                                                                                                                                                                    top 30
                                                                                                                                                                  UK employers for Working
                                                  borrowers, colleagues                                                                                               Families in 2020
                                                   and the community.                                                                 given by our colleagues

                                                                                                                                      Community
                                                                                                                                      £970,000 5 years
                                                                                                                                        To local communities
                                                                                                                                                                          Celebrating

                                                                                                                                      through charitable giving    of being carbon neutral
                                                                                                                                          and volunteering

                                                                                                                                      Recognition
                                                                                                                                             Winner of

                                                                                                                                              21
                                                                                                                                           awards across
                                                                                                                                                                    Best Building Society Savings
                                                                                                                                                                      Provider at the Moneynet
                                                                                                                                                                      Personal Finance Awards
                                                                                                                                           the YBS Group

     3
         YBS Group average savings rate compared to rest of market average rates based on savings stock from CACI’s Current Account
         and Savings Database (CSDB). Data period January - November 2020.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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     Summary Financial Statement
                                                                                                          Group Statement of Financial Position                                                                  2020                    2019
                                                                                                                                                                                                                   £m                      £m

                                                                                                          Assets
                                                                                                          Liquid assets                                                                                   8,403.2                  5,602.3
     Details of your Society’s financial performance in 2020.                                             Loans and advances to customers                                                                38,798.6                 37,984.4
                                                                                                          Other assets                                                                                      729.0                    691.2

                                                                                                          Total assets                                                                                   47,930.8                44,277.9
     This financial statement is a summary of information in the audited Annual Report and Accounts,
     the Directors' Report and the Annual Business Statement, all of which are available to members       Liabilities
     and depositors free of charge at every office of Yorkshire Building Society, from 29 March 2021.     Shares - retail savings                                                                        33,368.3                 30,677.3
     However, as branches are only open for essential transactions for a copy of the full 2020 Annual     Wholesale funding and other deposits                                                           10,500.9                  9,924.4
     Report and Accounts, visit ybs.co.uk/annualreport, email agm@ybs.co.uk or contact us from            Subordinated liabilities                                                                          645.0                    626.4
                                                                                                          Other liabilities                                                                                 619.7                    383.1
     23 March 2021.
                                                                                                          Total liabilities                                                                              45,133.9                41,611.2
     Summary Directors’ Report                                                                            Members' interest and equity                                                                    2,796.9                   2,666.7
     The information contained in the Chairman’s welcome and Chief Executive’s review on pages
                                                                                                          Total members' interest, equity and liabilities                                                47,930.8                44,277.9
     2 to 9 addresses the requirements of the Summary Directors’ Report.
     The directors consider that the Group has adequate resources to continue in operational              Summary of key financial ratios                                                                        2020                    2019
                                                                                                                                                                                                                   %                       %
     existence for the foreseeable future. Accordingly, the going concern basis has continued to be
     adopted in preparing the Annual Report and Accounts.                                                Gross capital as a percentage of shares and borrowings                                                  7.85                    8.11
                                                                                                         The gross capital ratio is the relationship between the Group’s capital
     Approved by the Board of Directors on 23 February 2021:
                                                                                                         and its liabilities to investors. Capital comprises general reserves (i.e.
     John Heaps - Chairman                                                                               accumulated profits), hedging and revaluation reserves, subordinated
                                                                                                         liabilities and subscribed capital.
     Alasdair Lenman - Chief Finance Officer
     Mike Regnier - Chief Executive                                                                      Liquid assets as a percentage of shares and borrowings (liquidity ratio)                              19.16                   13.80
                                                                                                         The liquid asset ratio measures those assets available to meet requests by
                                                                                                         savers to withdraw their money, to fund mortgage advances and to fund
                                                                                                         general business activities. It expresses cash and assets easily converted
                                                                                                         into cash as a percentage of the Group’s liabilities to investors.
         Group Income Statement                                                2020          2019
                                                                                 £m            £m                                                                                                                0.27                    0.30
                                                                                                         Profit for the year as a percentage of mean total assets
         Net interest income                                                 438.0          464.6
         Fair value gains and losses                                         (10.7)         (21.9)       Management expenses as a percentage of mean total assets                                                0.60                    0.66
                                                                                                         The management expense ratio measures how cost effective the Group is.
         Net realised gains                                                    12.9           6.3        It is calculated by comparing the management expenses (administrative
         Other income                                                          13.8           8.4        expenses opposite) for the year with average total assets.
         Total income                                                         454.0        457.4
                                                                                                        Independent auditors' statement on the            We also read the other information contained   to the full Annual Accounts. Our report on the
         Management expenses1                                               (275.8)       (289.6)       Summary Financial Statement to the                in this Annual Review and consider the         Society’s full Annual Accounts describes the
         Impairment of loans and advances to customers                       (12.2)          (0.2)      members of Yorkshire Building Society.            implications for our report if we become       basis of our audit opinion on those Annual
                                                                                                                                                          aware of any apparent misstatements or         Accounts, the Annual Business Statement and
                                                                                                        We have examined the Summary Financial
         Movement in provisions                                                (4.7)         (0.4)      Statement of Yorkshire Building Society (the
                                                                                                                                                          material inconsistencies with the Summary      the Directors’ Report.
                                                                                                                                                          Financial Statement. The other information
                                                                                                        ‘Society’) set out on pages 12 to 13, which
                                                                                                                                                                                                         Opinion
         Profit before tax                                                   161.3          167.2       comprises the Group Income Statement,
                                                                                                                                                          comprises only the Chairman’s welcome, the
                                                                                                                                                          Chief Executive’s review and the Summary
                                                                                                        Group Statement of Financial Position and                                                        In our opinion the Summary Financial
         Tax expense                                                         (37.8)         (38.3)      summary of key financial ratios.
                                                                                                                                                          Directors' Remuneration Report.                Statement is consistent with the full Annual
                                                                                                                                                          This statement, including the opinion, has     Accounts, the Annual Business Statement and
         Profit for the period                                               123.5          128.9       Respective responsibilities of directors          been prepared for and only for the Society’s   the Directors' Report of Yorkshire Building
                                                                                                                                                                                                         Society for the year ended 31 December
                                                                                                        and auditors                                      members as a body in accordance with
                                                                                                                                                          Section 76 of the Building Societies Act       2020 and complies with the applicable
     1
         Includes administration expenses, depreciation and amortisation.                               The directors are responsible for preparing the
                                                                                                                                                          1986 and for no other purpose. We do not,      requirements of Section 76 of the Building
                                                                                                        Summary Financial Statement, in accordance
                                                                                                                                                          in giving this opinion, accept or assume       Societies Act 1986, and the regulations made
                                                                                                        with the Building Societies Act 1986.
                                                                                                                                                          responsibility for any other purpose or to     under it.
                                                                                                        Our responsibility is to report to you our
                                                                                                                                                          any other person to whom this statement is
                                                                                                        opinion on the consistency of the Summary
                                                                                                                                                          shown or into whose hands it may come save
                                                                                                        Financial Statement with the full Annual
                                                                                                                                                          where expressly agreed by our prior consent
                                                                                                        Accounts, the Annual Business Statement
                                                                                                                                                          in writing.
                                                                                                        and the Directors' Report and its compliance                                                     PricewaterhouseCoopers LLP
                                                                                                        with the relevant requirements of Section 76      Basis of opinion                               Chartered Accountants and Statutory Auditors
                                                                                                        of the Building Societies Act 1986 and the                                                       Leeds.
                                                                                                                                                          Our examination involved agreeing the
                                                                                                        regulations made under it.
                                                                                                                                                          balances in the Summary Financial Statement    23 February 2021.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
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             Your
             questions
             answered
             We asked our online community
             My Voice, what they’d like to
             know. Here are some of the
             common questions.
                                                                                              Why are pay and bonuses so high for your executive directors?

                                                                                                   Pay includes a number of elements, such      have, which includes consequences for
                                                                                                   as salaries and bonuses. The pay we          them personally, including FCA imposed
     How do you reward loyalty?                                                                    offer is aligned with the wider financial    fines and even custodial sentences for
                                                                                                   services market and designed to attract      very serious rule breaches.
                                                                                                   and retain people who can drive the
          We’re owned by you so your opinions       of our most loyal members. This also           business forward and deliver long term       Bonus opportunity for executive directors
          matter - you told us that you’d like to   kick-starts our new member loyalty             value for our members. Your leadership       looks at their accountabilities and
          be rewarded for your loyalty and we’ve    initiative and we’ll be introducing            team has responded to the challenges         responsibilities, and if they don’t meet
          listened. We’re investing £20m in 2021    member exclusive rates and products            of the COVID-19 pandemic and made            the high standards expected, or deliver
          to increase the savings rates for 1.6m    as part of this.                               decisions to help steer the business         the right level of member value a bonus
                                                                                                   during this unusual time, and the Society    won’t be paid – it can also be taken back
                                                                                                   has performed well in 2020 as a result       (referred to as clawback) if behaviours or
                                                                                                   of this. The Remuneration Committee          performance which impacts members or
     How resilient is the Society to the impact of the                                                                                          the Society are identified later.
     COVID-19 pandemic?                                                                            (our independent committee to oversee
                                                                                                   executive pay) believe what we pay is        You can find out more about directors
                                                                                                   proportionate when considering the level     remuneration in the summary report on
          It’s hard to know how the COVID-19        back some of the services we offer,            of decision-making accountability they
          pandemic will continue to impact our      for example focussing on essential                                                          pages 24 to 29.
          wider society, taking into account        transactions only in branches during
          the rollout of vaccines and new           lockdown.
          strains. We’re committed to keeping                                                 How do you balance the focus on mortgages and
          our branches and contact centres          We’re in good shape with capital behind
          open through the restrictions we’re       us to protect ourselves from unexpected   savings with supporting the community?
          all experiencing on our daily lives.      changes and overall are in a strong
          We’ve introduced flexibility and scaled   position after a successful year.              Mortgages, savings and community             In 2020 the Yorkshire Building
                                                                                                   are the real cornerstones of a building      Society Charitable Foundation set up
                                                                                                   society. While our key focus is helping      a Coronavirus Response Fund with a
                                                                                                   people to save and own their own home,       donation of £100,000 from the Society.
     What’s the future for how members choose to deal                                              we’re committed to creating a lasting        The fund supported 61 smaller charities
                                                                                                   positive impact in our communities.          helping communities across the country
     with you, is this moving to more online?
                                                                                                   We do this in a number of ways including     to cope with the impact of the pandemic.
                                                                                                   working with our charity partner,            This is in addition to over £320,000
          As a business we need to continue to      at a rapid pace. However our branches                                                       donated by the Foundation to 299
          evolve to remain relevant. Alongside      and agencies are still the key part of         which is Age UK for the next two years,
                                                                                                   volunteering and through Money Minds         charities around the UK. Donations are
          this, members’ needs and behaviours       who we are and where a large amount                                                         made possible thanks to our members
          are changing and the way they want        of our members transact. While we              – our financial education programme
                                                                                                   and Career Minds, a new programme that       who take part in the Small Change Big
          to open and operate their savings         continue to invest in our online                                                            Difference® scheme, donating their
          accounts, receive mortgage advice,        capabilities, our branches and agencies        enables our colleagues to volunteer their
                                                                                                   skills to help 14-16 year olds prepare for   pence of interest to the Foundation once
          manage their money and access             are still there for our members too.                                                        a year.
          financial services continues to do so                                                    the world of work.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
16

                2020
                what a year it was...
                                                                                                                                                                                   17

              January 16                              March 23                                       March 24                     April 1
              The World Health                        Boris Johnson told us                          The 2020 Tokyo               Yorkshire Building Society
              Organization is                         “you must stay at home, to                     Summer Olympics              Charitable Foundation
              notified of the novel                    protect the NHS during the                     were postponed               launched a £100,000
              COVID-19 in China.                      coronavirus pandemic”.                         until 2021.                  Coronavirus Response Fund
                                                                                                                                  to support smaller charities

                                                                                                                                                             April 5

                                                                                                                                                             The Queen gave a
                                                                                                                                                             rare public
                                                                                                                                                             address and said
                                                                                                                                                             “We will be with
                                                                                                                                                             our friends again.
                                                                                                                                                             We will be with
                               June 30                                      June 30                  May 15                      May 13                      our families again.
                               Our EYH partnership came to an               37,307 borrowers         End Youth                   We made our                 We will meet
                               end – it raised more than £1.1m              supported so far         Homelessness (EYH)          Money Minds                 again.”
                               and helped 557 young people                  with a mortgage          bond launched,              lessons accessible
                               and 114 dependent children                   payment holiday.         which raised almost         online.
                               into their own rented homes.                                          £80,000.
     July 4
     Pub pints are
     poured and
     couples finally
     said "I do" as
     lockdown
     restrictions are
     eased across
     England.
                                     August 11                        October 5                      November 16                             December 24
                                     YBS Savings                      ‘Staying Safe Online’ and      Age UK is our new charity               As a thank you to our
                                     mobile app was                   ‘Protecting Yourself Against   partner – we’ll provide                 colleagues going above
                                     launched.                        Fraud’ online tutorials went   advice, support and care                and beyond in 2020 we
                                                                      live, filmed at home by YBS     when older people need                  gave everyone Christmas
                                                                      colleagues.                    it most.                                Eve off work.
ANNUAL REVIEW 2020 - YORKSHIRE BUILDING SOCIETY
18                                                                                                                                                                Directors for election 19

                                                    We’ve all had to adapt over the
       Supporting                                   last year, from juggling home
                                                    schooling with work, to the many       Your
                                                                                                                                       As the Board of a building
                                                                                                                                       society, the directors are here
       our                                          restrictions in our daily lives.
                                                                                           Board                                       to represent you. There are a

       colleagues                                   Throughout this time we’ve had
                                                    two consistent aims; protecting
                                                                                                                                       number of executive directors
                                                                                                                                       who work full time for the
       so they’re here                              the health and wellbeing of our        acting                                      Society, like Mike Regnier your
                                                                                                                                       Chief Executive, and then
                                                    colleagues and continuing to           for you
       to support you                               provide the essential services
                                                                                                                                       independent non executive
                                                                                                                                       directors that aren’t employed
                                                    our members need.                                                                  by the Society. Each brings a
                                                                                                                                       variety of skills and experience.

 •	Our contact centres and most of our
     branches have remained open throughout,                                              You can find out about the specialist committees that focus on key areas such as risk,
     so we’ve been there if you needed us.            I am truly humbled to               governance, remuneration and audit, and the directors that attend these in the full
                                                      be your CEO at such                 report and accounts. For a copy visit ybs.co.uk/annualreport, email agm@ybs.co.uk
 •	We trained colleagues from across the             a unique time in our                or contact us. If you're visiting our branches for an essential transaction copies will be
     business to help out in the areas where                                              available from 29 March 2021.
     we’ve needed it most, such as our contact        long history, and so                This year you can vote for nine directors at the AGM, including a new Independent Non
     centre – they’ve been taking calls to answer
     any questions you may have.                      proud of everything our             Executive Director, Mark Parsons.
                                                      colleagues have done
 •	Working with BUPA and Unmind, we’ve               to support our members                                            Mark Parsons
     shared lots of helpful resources and tips
                                                                                                                        Independent Non Executive Director
     with our colleagues from podcasts on             and each other.
                                                                                                                        Joined the Board in 2020
     mental wellbeing and managing stress to
     keeping active at home.                          Mike Regnier
                                                                                                                        I am fortunate to have had a 35 year career in large retail
 •	We increased investment in our remote                                                                               financial services companies. In that time I held executive
     secure log in software, which meant                                                                                responsibilities for finance, mortgage and savings products,
     more of us could work from home - our                                                                              branches and telephone centres, Human Resources, IT
     colleagues connected virtually, working                                                                            investment and risk management.
     together for you.                                                                                                  I am proud that I began my executive career at a building
                                                                                                                        society and was latterly Chief Executive of Coventry
 •	We now offer unlimited dependents’ and                                                                              Building Society. I’m delighted to have now joined the
                                                                                                                        Yorkshire Building Society Board, where I believe I can
     carers’ leave for those colleagues with
                                                                                                                        apply this broad experience to support and guide the
     caring responsibilities due to changing                                           why                              Society into the future.
     circumstances.
                                                                                       vote                             A building society is privileged to be owned by its
                                                                                       for me?                          members, and we have a duty to ensure its run in your
 •	Any colleague shielding, unwell or needing                                                                          best interests. Since joining the Board last October I’ve
     to self-isolate that couldn’t work from home                                                                       been pleased that, both in day-to-day actions and our
     also qualified for paid sick leave. We’re                                                                          strategy, the Society is focused on this duty. I am intent
     also proud that we didn’t have to furlough                                                                         on this continuing.
     anyone and everyone remained on full pay.
20 Directors for re-election                                                                                                                       Directors for re-election 21

                               Neeta Atkar                                                                 John Heaps
                               Independent Non Executive Director                                          Chairman
                               Joined the Board in 2017                                                    Joined the Board in 2014

                                                                                                           At a time when COVID-19 has so badly impacted all our lives,
                               I’m proud to be part of Yorkshire Building Society and                      the importance of my principal role as your Chairman to
                               it’s a privilege to be a member of the Board. My 30 years’                  ensure the safety and soundness of our Society, could not
                               experience working in the financial services industry, in                   be greater.
                               risk management and as a regulator - and being a member                     I do this in various ways, including the development and
                               myself allows me to constructively challenge and help                       management of your Board, ensuring it is made up of
                               oversee the strategy of your Society.                                       hugely capable people, diverse in skills as well as gender
                                                                                                           and ethnicity. During these difficult times it’s also critical
                               For all of us, 2020 was a challenging year. So I’m particularly
                                                                                                           that the Board works to develop and oversee the execution
                               proud and impressed by how well colleagues have
                                                                                                           of an effective strategic plan, that addresses both our
                               continued to provide fantastic support to our members
    why                        whilst also dealing with their own personal circumstances.
                                                                                                 why       fundamental Purpose, as well as the challenges of COVID-19
    vote                       Their commitment to your Society has been unwavering.             vote      and the increasingly digital world in which we operate. I am
                                                                                                           pleased to say that the Society has risen superbly to these
    for me?                    The year ahead will continue to be challenging, so my focus
                                                                                                 for me?   challenges.
                               will be to ensure that we continue to support our members,                  Looking forward, my principal focus will be to ensure we
                               colleagues and community.                                                   have the people and the strategy to meet and overcome
                                                                                                           whatever we have to face and to continue to provide Real
                                                                                                           Help with Real Life for all our members and customers.

                               Guy Bainbridge                                                              Alison Hutchinson
                               Independent Non Executive Director                                          Senior Independent Non Executive Director & Vice Chair
                               Joined the Board in 2019                                                    Joined the Board in 2015

                                                                                                           Since joining the Board, my focus has been to ensure your
                               Since joining the Board I’ve been constantly impressed
                                                                                                           Society remains relevant, competitive and grounded in what
                               by the passion shared by all Board members and senior
                                                                                                           matters most to you, our members.
                               management for our Society. In 2020 with the COVID-19
                               pandemic this has been more evident than ever, with the                     One of my responsibilities is ensuring the colleague voice
                               focus on our purpose, and the wellbeing of our current and                  is heard by the Board to better inform decisions. That
                               future members and colleagues. I am now also spending                       responsibility has been a real privilege, especially this year.
                               time making sure we have a strong strategy for the post-                    To hear how well the executives and our colleagues have
                               pandemic world in which many pre-existing trends have                       responded to the many challenges as a result of COVID-19,
                               accelerated, and new ones emerged.                                          ensuring we look after our members, colleagues and the
                                                                                                           communities in which we operate.
                               As Chair of the Audit Committee I’ll continue to use my
    why                        financial services experience to assess and oversee our           why       Looking forward we’ll continually review how technology
    vote                       controls. These are particularly important for the safety of      vote      can improve the way we make it even easier for our members
                                                                                                           to engage with us, whilst not losing the personal service we
    for me?                    members’ savings and the safety of business interactions          for me?   all value tremendously. I value your trust in me to represent
                               that members and customers have with the Society. I’ll use
                                                                                                           your views at the Board and hope you’ll support me to
                               my auditing experience to help the Society maintain its
                                                                                                           continue in this role, so I can draw from over 30 years of
                               financial soundness and the strong quality of financial and
                                                                                                           experience across financial services, retail, technology and
                               non-financial reporting.
                                                                                                           the charity sector to best serve you.
22 Directors for re-election                                                                                                                     Directors for re-election 23

                               Alasdair Lenman                                                            Mike Regnier
                               Chief Finance Officer                                                      Chief Executive
                               Joined the Board in 2017                                                   Joined the Board in 2014

                                                                                                          2020 was an unprecedented year, of course. During the
                               I’ve been the CFO of your Society for three years. Our work                COVID-19 crisis we remained focused on two priorities –
                               on risk management has delivered a stable platform to                      looking after the health and wellbeing of our colleagues and
                               enable us to navigate the challenges of 2020 successfully.                 providing continuity of service to our members. The way our
                                                                                                          colleagues responded to this was nothing short of amazing
                               My other focus over the last 12 months has been to develop
                                                                                                          and is another example of why I am immensely proud to work
                               and improve our mortgage lending criteria, so that we can                  for Yorkshire Building Society.
                               help more people to find a place to call home and begin to
                                                                                                          As events like this demonstrate, we face an uncertain future
                               improve our margin performance, so that we can increase,
                                                                                                          and it’s more important than ever that we focus on meeting
                               wherever possible, the value we return to members.                         our members’ expectations.
                               Your Society’s management team have built a plan that will,                Working with some of the UK’s largest financial services firms,
                               over the next few years, make us both much easier to do                    I’ve learnt how to apply technology to improve the quality
    why                        business with and even more efficient operationally. I would     why       and consistency of what we do behind the scenes, so we
    vote                       love to have the opportunity to implement this.                  vote      can provide the best possible service to customers however
    for me?                    As I said last year, if re-elected, I will continue to work to   for me?   they choose to deal with us. I’ve also seen how to run an
                                                                                                          efficient organisation which will ensure that your Society is
                               deliver sustainable benefits for our members, by driving
                               strong commercial outcomes and highly effective                            sustainable for future generations.
                               risk management.                                                           I’m passionate about creating an inclusive working environment
                                                                                                          and a culture where all of our colleagues feel valued and
                                                                                                          supported, so everyone can contribute to providing the best
                                                                                                          value and service that we can to all of our customers.

                               Guy Parsons                                                                Stephen White
                               Independent Non Executive Director                                         Chief Operating Officer
                               Joined the Board in 2013                                                   Joined the Board in 2016

                               Being part of a values-led organisation that has its members
                                                                                                          An early career in a building society branch taught me about
                               at its core is really important to me. I’ve worked for large
                                                                                                          the financial challenges affecting customers day-to-day.
                               and small businesses and it’s clear to me that the ones that
                                                                                                          Coupled with my international experience at board level,
                               succeed consistently focus on doing the right thing for their              I have a unique perspective on balancing the pressures of
                               customers. The Society has been doing this for over 150                    being competitive and ensuring the needs of members and
                               years and despite the economic uncertainty caused by the                   customers are met through our service and our range of
                               COVID-19 pandemic, we continue to focus on helping people                  mortgage and savings accounts.
                               shape better financial futures for themselves.
                                                                                                          Being an organisation focused on our members drives
                               Despite current low interest rates we need to support our                  my passion for the Society. I’m proud that we’ve reduced
    why                        loyal savers and give them the best value. At the same time      why       processing times for mortgages and maintained savings rates
    vote                       we need to support our younger members and customers
                               who are trying to buy their own home.
                                                                                                vote      which were higher than average in our sector in 2020.
    for me?                    I’ll draw on my commercial expertise to offer support and
                                                                                                for me?   Looking ahead, I hope my contribution helps protect and
                                                                                                          enhance the Society for the future. I’m committed to seeing
                               advice to the Society’s executive team, as they evolve and                 our digital strategy come to life and will continue to put our
                               develop our strategy in this challenging marketplace, whilst               members first and build a business we can all be proud of.
                               maintaining our clear focus on our members.
24                                                                                                                                                                                                       Remuneration report 25

                                                                                                                      remuneration is competitive while remaining             Our executive directors are highly skilled and

       summary                                                                                                        commensurate with our mutual status.

                                                                                                                      Have there been any changes to the
                                                                                                                                                                              experienced; they’re critical to delivering the new
                                                                                                                                                                              challenging phase of our business transformation

       directors’                                                                                                     Remuneration Policy following the
                                                                                                                      Committee’s review?
                                                                                                                                                                              and new business strategy. As Chair of the
                                                                                                                                                                              Remuneration Committee, I strongly believe the

       Remuneration                                                                                                   Within the context of the current environment,
                                                                                                                                                                              change proposed is right for the Society and
                                                                                                                                                                              recommend members vote for its approval at the

       Report                                                                                                         plus the strong financial performance and
                                                                                                                      ongoing commitment to enhance member value,
                                                                                                                      the Committee has conducted its annual review
                                                                                                                                                                              2021 AGM.

                                                                                                                                                                              How have executive directors’ salaries
                                                                                                                      of all aspects of executive director remuneration       changed in 2020?
                                                                                                                      and believes changes need to be made.                   A 2020 pay settlement of 2.6% was agreed for
       Guy Parsons, Chairman of the                                                                                                                                           colleagues to reflect the vital role they played
       Remuneration Committee,                                                                                        On bonus, we plan to increase the focus on
                                                                                                                                                                              delivering critical services to customers and in
       explains our approach to                                                                                       long-term value creation in addition to the
                                                                                                                                                                              our financial performance. Executive directors did
                                                                                                                      achievement of profitability and customer
       rewarding directors and                                                                                        satisfaction, which is the focus of the current
                                                                                                                                                                              not receive a pay increase in 2020.
       colleagues.                                                                                                    bonus scheme. This means continuing to protect          Will executive directors receive a
                                                                                                                      the Society’s financial strength and stability,         bonus for 2020?
       Photo taken pre March 2020 at Victoria Quarter, Leeds.                                                         whilst also delivering strategic change, and
                                                                                                                                                                              The Society’s bonus scheme applied in 2020,
                                                                                                                      protecting and enhancing the interests of our
                                                                                                                                                                              ‘Building Together’, is linked to the core business
                                                                                                                      members and colleagues in a way that reflects our
     What are the Directors’ Remuneration                       our members alongside strong, sustainable                                                                     objectives of financial performance, customer
                                                                long-term performance.                                vision, purpose and culture.
     Report and the Remuneration Policy?                                                                                                                                      experience and risk management. The scheme is
                                                                As a member, you have a say in how the directors      The changes to the bonus we are proposing are:          the same for all colleagues, ensuring everyone
     Every year your Society publishes its
     Remuneration Report. The 2020 report shows                 are paid because you have the opportunity to input    •	Increasing the maximum bonus opportunity             is working towards the same business outcomes.
                                                                                                                                                                              In 2020, executive directors had the opportunity
     executive directors’ remuneration awarded in               on this report through an advisory vote at the AGM.      for executive directors through a new bonus
     2020 (and 2019 for comparison). Every three                We take your views seriously and we’ll review the        plan, tied to the longer-term strategic goals        to earn a bonus of up to 50% of base salary. In
     years, or sooner if there’s a policy change, the           results to consider any appropriate action.              of the Society.                                      line with our Remuneration Policy for executive
                                                                                                                                                                              directors, a business controls overlay process is
     Remuneration Policy for the executive directors
     is shared with members. At the 2021 Annual                 How does the Society approach                         •	Performance targets are broad and linked to          also carried out to ensure the Society hasn’t been
                                                                                                                         enhanced member value, ESG (Environment,
     General Meeting (AGM), both the Directors’                 remuneration and specifically manage                     Social and Corporate Governance) and                 exposed to unnecessary risk; this forms part of
     Remuneration Report and the Remuneration                   executive directors’ remuneration?                       Diversity priorities.                                our ‘sustainability review’.
     Policy will be subject to an advisory vote.
     This is due to a proposed change within the
                                                                The Society seeks to ensure reward and benefit        •	Performance measures and targets will be             For 2020, the executive directors’ were set
                                                                                                                                                                              stretching objectives, played out in the context
                                                                arrangements are fully aligned in what we do             set each year, taking account of multi-year
     Remuneration Policy for executive directors.               every day in providing real help for the real lives      performance and overall, protecting member           of a challenging, and unpredictable trading and
     2020 has been a very challenging year for the              of our members. We seek colleague opinion on             interests.                                           economic environment due to the pandemic.
                                                                                                                                                                              In determining bonus awards the Committee
     Society, our members and colleagues due to the             our remuneration framework and ensure our
                                                                policy is gender neutral and offers a fair outcome
                                                                                                                      •	There will be no automatic participation in          carried out a comprehensive review of individual
     difficult environment created by the COVID-19                                                                       the scheme and a pre-grant performance
     pandemic. Throughout, we’ve focused on                     to colleagues in its design and practice. Retaining      assessment will enable the Committee to              performance and the Society as a whole. The
     safeguarding the wellbeing of our colleagues and           a skilled and committed senior management team           apply judgement in setting the maximum               Society’s Risk and Audit Committees also
     continuing to deliver excellent customer service.          is critical to the Society achieving our objectives      bonus opportunity on a yearly basis, based on        provided input in relation to our financial and
     The Summary Financial Statement on pages 12 to             and delivering long term value for members.              achievement of the previous year’s performance       non-financial performance, including the member
     13 shows the Society has been able to continue                                                                      and the financial stability of the Society.          and customer experience we’ve delivered in
                                                                The Society manages executive directors’ pay via
                                                                                                                                                                              2020. The remuneration of colleagues generally
     its strong financial performance, meaning we’re
     well-placed to deliver improvements in member
                                                                the Remuneration Committee (the Committee),           •	Payment of bonus will also remain subject            was also taken into consideration.
                                                                which is made up of three non executive                  to the established business controls overlay
     value over the long-term.                                  directors. The Remuneration Committee has                process and Committee discretion.                    It is within this context that the Committee
     This is an important time for the Society. We’re           specific responsibility for making sure we have       •	Compulsory deferral, malus and clawback will         believes the Society has been able to continue
                                                                                                                                                                              its strong financial performance meaning we are
     embarking on an ambitious transformation                   the right policies and processes in place for our        continue to apply. This further increases the link
     journey over the next few years that aims to               most senior roles, the Committee is guided by            between long-term performance and bonus              well-placed to deliver improvements in member
     deliver better service and improved value to               the Society’s Remuneration Policy ensuring               outcomes in line with regulatory expectations.       value over the long-term in a sustainable and
26                                                                                                                                                                                                                                                                        27
                                                                                                                                                                                                                                                                          27
     balanced way. They have approved a bonus                              delivers variable pay in a manner that prevents                          How much did our non executive directors earn in 2020?
     payment for executive directors, with an eligible                     undue risk taking whilst achieving the level of
                                                                                                                                                    As referenced earlier in these pages, the non-executive directors agreed to not take an increase in
     executive director achieving, on average,                             sustainable performance.
                                                                                                                                                    fees for 2020 and therefore they remain at the same level as 2019.
     76.42% of their maximum opportunity. For 2020
                                                                           Non executive directors do not participate in any
     performance year, 99.06% of eligible colleagues                                                                                                 Non executive director                           2020                    2020                         Total
                                                                           bonus scheme.                                                                                                              Basic Fees              Committee                    £000
     will receive a bonus, on average 71.7% of their                                                                                                                                                  £000                    Fees £000
     maximum bonus opportunity. You can find more
     information on the Society’s 2020 results that                        Were non executive director fees                                          John Heaps (Chairman)                            197                     0                            197
     have influenced the recommended 2020 bonus                            changed in 2020?                                                          Neeta Atkar                                      52                      30                           82
     outturn on pages 12 to 13.                                            The Chairman and non executive director fees                              Alison Hutchinson                                57                      20                           77
     In line with regulation, all bonuses payable                          are reviewed annually. However, at the time of                            (Vice Chair from 01/10/2020)
     to executive directors designated as ‘Senior                          review, the COVID-19 pandemic was impacting                               Gordon Ireland                                   52                      18                           70
     Managers’ are subject to deferral. This applies to                    the UK economy as a whole, including Financial
                                                                                                                                                     Mark Pain                                        55                      7                            62
     colleagues whose total remuneration is greater                        Services. As a result, the non executive directors                        (Vice Chair – retired 30/09/2020)
     than £500,000, or where their bonus equates                           requested that no increase be proposed for their
                                                                                                                                                     Guy Bainbridge                                   52                      30                           82
     to at least 33% of total remuneration in a given                      fees for 2020 and fees remained as they were
     year. This is known as the 'de-minimis threshold'.                    for 2019.                                                                 Guy Parsons                                      52                      19                           71
     Under these circumstances, bonuses will be paid                                                                                                 Catharine French                                 9                       1                            10
     over a longer period and delivered in part via                                                                                                  (Member of Board and Remuneration
     a Share Equivalent Instrument (SEI) rather than                           For the full Directors’ Remuneration                                  Committee 01/04/2020 - 10/05/2020)
     cash. In addition to regulatory requirements,                             Report which includes more information                                Mark Parsons                                     10                      4                            14
     the Society’s Remuneration Policy requires all                            on the Policy and bonus payments please                               (Joined 20/10/2020)
     bonuses be deferred for the senior management                             go to ybs.co.uk/rewardpolicy
     team. Bonus deferral ensures that the Society

     How much did the executive directors earn in 2020?                                                                                             Remuneration Policy
     The table below shows the remuneration of the Society’s executive directors for the years ended                                                The Remuneration Policy is subject to an advisory vote at the 2021 AGM. Key elements of the policy
     31 December 2020 and 2019. This is audited information.                                                                                        are outlined below, with details of the Society’s full Remuneration Policy available in the Annual
                                                                                                                                                    Report and Accounts online at ybs.co.uk/annualreport
     Executive directors’ remuneration
                                                                                                                                                     Remuneration          Purpose and link                    Operation                             Opportunity
                                               Fixed Remuneration                                          Variable Remuneration                     element               to strategy
         Executive    Base**            Taxable          Pension           Total             Bonus*            Total             Total               Base salary           Reflects the contribution of        Base pay is typically reviewed        n/a
         director     Salary            Benefits         Allowance         FIXED             £000              VARIABLE          Remuneration                              executive directors in their role   annually in line with the range of
                      £000              £000             £000              Remuneration                        Remuneration      £000                                      as defined by the combination       increases for all colleagues, and
                                                                           £000                                £000                                                        of:                                 determined with reference to:
                      2020     2019     2020     2019     2020      2019    2020    2019     2020     2019     2020     2019     2020        2019                          • Skills, knowledge and             • Role, experience and
                                                                                                                                                                             experience                          individual performance;
         Mike                                                                                                                                                              • Performance                       • Affordability – the economic
         Regnier -    591      583       15        15      94       93      700      691      226      280      226      280     926         971                           • Demonstrating the Society’s         environment and overall
         CEO                                                                                                                                                                 purpose, priorities and             financial state of the Society;
         Alasdair                                                                                                                                                            behaviours.                       • Comparison to the external
         Lenman -     359      356       31        43      57       57      447      456      137      177      137      177     584         633                                                                 market, supported by
         CFO                                                                                                                                                                                                     reference to the Society’s
                                                                                                                                                                                                                 grading structure, our Career
         Stephen                                                                                                                                                                                                 Framework.
         White -      433      429       31        31      69       69      533      529      165      186      165      186     698         715
         COO                                                                                                                                                                                                                                        Continued over page
     *     The bonus figures illustrated represent the full amount of bonus awarded in respect of the 2020 performance year. Mike,
           Alasdair and Stephen will only receive 20% of this in cash in 2021, with the remainder delivered over seven years. Full details
           regarding how bonuses are paid including deferred elements paid in line with regulatory requirements are available within the
           full Directors’ Remuneration Report available at ybs.co.uk/annualreport.
     **    The executive directors’ base salaries last increased in May 2019. The 2020 number shows as higher based on a full 12
           months of payment (rather than 8 months at the new rate in 2019).
28                                                                                                                                                                                                                                        29
                                                                                                                                                                                                                                          27

     Remuneration    Purpose and link                   Operation                            Opportunity                  Appointing new executive directors
     element         to strategy
                                                                                                                          New hires                                                Bonus buy out
     Bonus           Rewards annual performance.        • Key measures within                Under ‘Building Together’
     (‘Building      ‘Building Together’ Bonus is         the Corporate Plan have            executive directors          When agreeing the components of a remuneration           The Committee may make awards on hiring an
     Together’ and   driven by :                          to be achieved for an ‘on          have the opportunity         package for the appointment of executive directors,      external candidate to the Board to compensate
                     • Financial performance (Profit                                         to earn an on target
     ‘Leading for                                         target’ bonus pay-out, and
                                                                                             bonus of 30% of base
                                                                                                                          the Committee will apply the following principless:      them for the forfeiture of any award entered into
     Value’)           Before Tax)                        considerably exceeded for                                                                                                with a previous employer (proof will be required).
                     • Customer Experience (Net           maximum pay out.                   salary. The maximum
                                                                                             executive directors bonus
                                                                                                                          •   T he packages will be sufficient to recruit
                                                                                                                               individuals of the required calibre to lead the     In determining any such ‘buy out’, the Committee
                       Promotor Score)                  • The profit figures utilised        opportunity is 50% of                                                                 will consider all the relevant factors including
                                                          for pay out may be adjusted                                          business and effectively execute the strategy for
                     • Individual performance                                                base salary.                      members;                                            the likelihood of the awards vesting should
                       (individual balanced scorecard     at the discretion of the
                                                                                                                          •	
                                                          Remuneration Committee in          Under ‘Leading for Value’                                                             the candidate have remained in their previous
                       objectives).                                                                                         The Committee will look to align the
                                                          line with approved principles      maximum achievement                                                                   employment, the form in which they were awarded
                     The new proposed bonus                                                  against all performance        remuneration package offered with the Society’s        and the time over which they would have vested.
                     scheme; ‘Leading for Value’          to ensure a true and fair view
                                                          of performance is applied.         criteria could result in a       broader remuneration policy; and,                    The buy-out will vest no faster than any awards
                     Bonus is driven by :
                     • Delivery of key strategic        • Bonuses for executive
                                                          directors will be subject to the
                                                                                             bonus of
                                                                                             • 75% of base salary for     •	
                                                                                                                            The Committee will ensure that the level of pay
                                                                                                                            is necessary but not excessive.
                                                                                                                                                                                   they replace nor the value exceed the aggregate
                                                                                                                                                                                   amount of unvested variable remuneration.
                       milestones                                                              the Chief Executive
                                                          relevant regulatory disclosures.
                     • Enhancement of member value      • The Committee reserves             • 50% of base salary for                                                              Bonus buy outs will be liable to forfeiture or
                     • Environmental, social and                                               other executive                                                                     ‘clawback’ in the event of early departure and are
                                                          the right to apply a malus
                       governance (ESG) metrics.
                                                          adjustment (reduce bonus             directors.                                                                          executed in line with Regulation.
                                                          partly or fully, for current
                                                          and previous years which
                                                                                                                          Retention payments
                                                          have not yet been paid) and to
                                                          apply clawback (recover bonus                                   The approach to rewarding retention payments is considered on an exceptional basis and will be agreed
                                                          payments already made) as                                       by the Remuneration Committee and subject to the relevant regulations, deferral, malus and clawback and
                                                          applicable.                                                     Remuneration Committee discretion.
                                                        • Bonus pay outs are subject to
                                                          clawback for up to a maximum
                                                          of ten years.
                                                                                                                          Leaver arrangements and loss of office
                                                        • In addition to the above, for                                   Notice period          The standard notice period is 12 months from the Society and 12 months from the
                                                          the ‘Leading for Value’
                                                          scheme, the committee will
                                                                                                                                                 executive directors.
                                                          carry out a pre-grant                                                                  In normal circumstances, executive directors will be required to work their notice
                                                          assessment before                                                                      period. In the event executive directors are not required to fulfil their notice
                                                          determining individual                                                                 period, they will receive a payment in lieu of notice, or they may be placed on
                                                          eligibility. The outcome of                                                            garden leave.
                                                          this assessment will determine
                                                          participation and maximum                                       Termination            Typically, termination payments will consist of basic salary and other contractual
                                                          opportunity for individuals                                     payment                benefits for the notice period, the emphasis being to not reward failure.
                                                          (subject to the overall scheme
                                                          maxima as set out in the                                        Annual bonus           Subject to Remuneration Committee discretion and the Society’s risk overlay
                                                          ‘opportunity’ column).                                                                 process, executive directors who resign from the Society’s will retain eligibility to
                                                                                                                                                 any deferred payments earned in previous years.
     Benefits        Executive directors receive        All colleagues, including            Benefits provided to
                     benefits to ensure their           executive directors, have access     executive directors
                     total package is in line with      to ‘My Benefits’, a flexible         include car benefits,
                                                                                                                          Chairman and non executive directors’ remuneration
                     market practice and enable         benefits platform enabling           private medical
                     the attraction and retention       colleagues to choose the most        insurance, life cover and
                                                                                                                                                 Operation                                                 Opportunity
                     of executive directors of the      appropriate benefits for them.       insured sick pay.
                     required calibre.                                                                                    Chairman fees          Reviewed and approved by the Remuneration                 Fee levels take into account
                                                                                                                                                 Committee on an annual basis (the Chairman does           time commitment for the
                                                                                                                                                 not participate in discussing this item, if a member of   role and practice at other
     Retirement      The Society’s pension              Executive directors are eligible     From April 2021, all
                                                                                                                                                 the Committee).                                           organisations.
     benefits        arrangements support the           to participate in the Society’s      executive directors
                     recruitment and retention of       defined contribution pension         receive a contribution       Non executive          Reviewed and approved by the Board on an annual
                     executive directors through        scheme.                              in line with the wider                              basis.
                     the provision of competitive       Where contributions exceed           colleague group equal to     director fees
                     retirement benefits.               the annual or lifetime               a maximum of 11% of                                 • Non executive directors receive a basic fee.
                                                        allowance, executive directors
                                                        may be permitted to take a
                                                                                             base pay.
                                                                                                                                                 •	
                                                                                                                                                   An additional supplement is paid for serving on
                                                                                                                                                   or chairing a Board Committee.
                                                                                                                                                 •	
                                                        cash supplement instead of
                                                        contributions to the plan.                                                                 Non executive directors do not participate in
                                                                                                                                                     any performance pay or pension arrangement.
30                                                                                                                                                                                                          31

           Notice of                                                                                       Find out more
                                                                                                           •	For a copy of the full 2020 Annual Report and Accounts, visit ybs.co.uk/annualreport,
           Meeting                                                                                            email agm@ybs.co.uk or contact us from 23 March 2021. If you are visiting our branches
                                                                                                              for an essential transaction, copies will be available from 29 March 2021.
                                                                                                           • Find out more about your directors on pages 19 to 23.
                                                                                                           How to vote
                                                                                                           Voting by post or online means that you are appointing someone else (known as your proxy) to
                                                                                                           attend the AGM and vote on your behalf. You can tell your proxy how to vote on each resolution
     The Annual General Meeting (AGM) of Yorkshire Building Society will be held                           when you complete the enclosed voting form or vote online. Your proxy does not have to be a
     at 2.30pm on Tuesday 27 April 2021 at Yorkshire Building Society, Yorkshire                           member of the Society.
     House, Yorkshire Drive, Bradford BD5 8LJ for the following purposes:                                  If you appoint anyone other than the Chairman of the meeting as your proxy, they will
                                                                                                           unfortunately not be permitted to attend the AGM in person. In these circumstances, your
                                                                                                           appointment will be deemed to be the Chairman of the meeting. This will ensure that your vote
                                                                                                           still counts.
                                                                                                           Completed voting forms must be received by the Society’s scrutineers by 5pm on Friday 23 April
     Ordinary resolutions                                  Election and re-election of directors           2021. For more information on how to vote, see the enclosed letter and voting form.
     1. To receive the Directors’ Report, the               5. To elect Mark Alistair Parsons              If you have any queries, please call or email using the details on the enclosed letter.
        Annual Accounts, the Annual Business                6. To re-elect Neeta Avnash Kaur Atkar
        Statement and the Auditor’s Report for
                                                            7. To re-elect Guy Lawrence Tarn Bainbridge
        the year ended 31 December 2020.
                                                            8. To re-elect John Robert Heaps
        A Summary Financial Statement is
        included on pages 12 to 13.
                                                            9. To re-elect Alison Elizabeth Hutchinson    the event
                                                           10. To re-elect Alasdair Bruce Lenman
                                                                                                          Along with many other building societies we’ve
     2.	To approve the re-appointment of                  11. To re-elect Guy Paul Cuthbert Parsons
         PricewaterhouseCoopers LLP as auditor of                                                         had to make some changes to this year’s AGM.
                                                           12. To re-elect Michael Charles Regnier
         the Society to hold office until the conclusion                                                  As we continue to face the challenge of the
                                                           13. To re-elect Stephen Cameron White
         of the next Annual General Meeting.                                                              COVID-19 pandemic, unfortunately you won’t
     	To comply with legislation, the Society’s           Having formally evaluated their performance,   be able to attend the AGM in person this year.
         members have to appoint an auditor                the Board considers that all the directors
                                                                                                          Members and guests who travel to the meeting
         each year.                                        seeking re-election continue to be effective
                                                           and that they demonstrate the necessary        will not be admitted.
     3.	To approve the Directors’ Remuneration            commitment to the role.                        We’re recording the meeting so you’ll
         Report for the year ended 31 December
         2020.
                                                                                                          be able to watch it the following day from the
                                                           By order of the Board                          comfort of your own home. The recording will
     4.	To approve the Directors' Remuneration            Simon Waite, Group Secretary
                                                                                                          be available until the end of May 2021.
         Policy.                                           23 February 2021.
     	Resolutions 3 and 4 are advisory votes
         as explained in the Summary Directors'                                                           Just go to
         Remuneration Report on pages 24 to 29,                                                           ybs.co.uk/2021meeting
         which also sets out a summary of the
         Directors' Remuneration Policy changes.                                                          from Wednesday 28 April 2021.
     	There is a full version of the Directors'
         Remuneration Report in the 2020 Annual
         Report and Accounts.
a year of
            community
            spirit

                                                                                                                   mer weather
                                                                                                  Due to the war
                                                                                                                     d the time
                                                                                                   in spring, I foun
                                                                                                                    my garden…
                                                                                                  to work hard in
                                                                                                                    any hours in
       Despite 2020 being a testing year,                                                          Spending so m
                                                                                                                   t to chat to so
       our online member community; My Voice,                                                     the garden, I go
                                                                                                                         ople.
       showed resilience and drew some personal                                                        many lovely pe
       positives from last year.
       The biggest positive for many was the
       health and wellbeing of themselves and
       their loved ones.
                                                                                                    I’ve always appreciated my
       Many enjoyed the slower pace of life and                                                 nearest and dearest, but have had
       being able to spend more time at home and                                                  a revitalisation of it over 2020.
       some used the time to learn and develop
                                                                                                 I have also re-found the love of
       new skills and take up new hobbies.
                                                                                                      home life, a good book…
                                                                                                        i.e. the little things.

                                 g from home
              I’ve found workin
                                 ging, but life
               has been challen                                                               I’ve had the chance to learn
                                 co  mmute has
              without the daily                                                            new skills and realise what
                                                                                                                        I love
                                I’v e spent less
               been a blessing.                                                               doing in 2020. I am writing  a
                               n  tim e to utilise
              money and take                                                               novel and planning to pub   lish  it,
                                      saving.
                   different ways of                                                                                  e  don  e
                                                                                            something I wouldn’t hav
                                                                                                                    ma l yea  r.
                                                                                            if 2020 had been a nor

References to ‘YBS Group’ or ‘Yorkshire Group’ refer to Yorkshire Building Society, the trading names under which it operates (Chelsea Building Society,
the Chelsea, Norwich & Peterborough Building Society, N&P and Egg) and its subsidiary companies.
Yorkshire Building Society Charitable Foundation is a Registered Charity (No: 1069082) and a Registered Company (No:03545437). Registered Office:
Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ.
Small Change Big Difference® is a registered trademark of Yorkshire Building Society.
End Youth Homelessness (EYH) is a national movement of local charities working together to end youth homelessness in the UK. EYH trades through its
designated Administrator, Centrepoint (charity number 292411).
Age UK is a charitable company limited by guarantee and registered in England and Wales (registered charity number 1128267). Registered address:
Tavis House, 1-6 Tavistock Square, London WC1H 9NA.
Yorkshire Building Society is a member of the Building Societies Association and is authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation Authority. Yorkshire Building Society is entered in the Financial Services Register and its
registration number is 106085. Head Office: Yorkshire House, Yorkshire Drive, Bradford BD5 8LJ. ybs.co.uk
YBM 0510 23 03 21
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