Metro Bank is facing a shareholder backlash after handing its new chief executive a £500,000 bonus despite losing more than £250m last year.

Sky News has learnt that several major City investors plan to vote against the high street lender’s remuneration report at its annual meeting next week.

Sources said there was likely to be substantial opposition to the pay report after Daniel Frumkin was awarded a deferred annual bonus of more than £520,000.

Institutional Shareholder Services (ISS), an influential proxy adviser, is recommending that shareholders oppose the resolution on the grounds that Metro Bank’s bonus targets are insufficiently stretching.

“The structure of the bonus framework, especially under financial conditions, raises concerns, particularly as the weighting structure suggests that performance in one area is able to compensate for the outcomes from another element,” ISS said.

“Similar concerns are noted on certain individual performance targets and achievements, a number of which resemble vague day-to-day activities, e.g.: ‘Provided CEO with invaluable support across a range of internal and external matters through his first year, H1 results in particular’; ‘Further strengthened cost focus through greater transparency and discipline’.”

ISS added that it was “of concern that pay outcomes do not entirely appear to be aligned with performance in the year under review, given the fact that [losses have grown]…and a generally negative share price experience has been prevalent for shareholders”.

Metro Bank, which remains the subject of regulatory probes into its inaccurate calculation of assets on its balance sheet, defended itself by pointing to a temporary pay cut that Mr Frumkin agreed at the start of the pandemic.

“The remuneration committee determined that remuneration outcomes for 2020 should reflect the company’s performance in a challenging external environment, while recognising the substantial progress that has been made in delivering the Bank’s transformation programme, and applied discretion as appropriate,” a spokeswoman for the lender said.

“This included downward discretion to the overall bonus pool against the 2020 scorecard given the impact of the pandemic.”

A big vote against Metro Bank’s remuneration report – which is advisory rather than binding – would make it the latest in a series of large companies to be criticised by investors for their approach to rewarding executives during the COVID-19 crisis.

AstraZeneca, Rio Tinto, BAE Systems and the London Stock Exchange’s parent have all seen big protest votes in recent days.

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