£1m Standard Life bonus for Matthews

Published on Thursday 31 January 2008 20:38

TREVOR Matthews, the senior executive who abruptly quit Edinburgh life assurer Standard Life this week, will walk away with performance bonuses totalling more than £1 million, The Scotsman has learned.

Together with a basic salary believed to be comfortably in excess of 500,000, it is estimated Matthews, who headed Standard Life's UK life and pensions business, could be in line for a package of about 1.6m.

Matthews, who received a 1.2m "golden hello" when he joined Standard in May 2004 from Manulife in Australia, will also be paid by the Scottish group while on six months' "gardening leave" before he takes on his new role as chief executive of rival Friends Provident.

A spokesman for Standard, which floated on the stock market in the summer of 2006 after nearly 200 years of mutuality, said yesterday: "Trevor was a part of the team which delivered our strong performance in 2007 and is contractually entitled to bonus awards which reflect this."

Matthews, who was widely seen as a possible successor to Standard chief executive Sandy Crombie, and whose departure on Tuesday night overshadowed the company's annual report on new business sales the next day, received a 426,000 annual bonus in 2006.

This was in addition to a basic salary at that time of 505,000. He also received a one-off payment of 322,000 in 2006, which was also related to his recruitment "signing-on fee".

Matthews is believed to be set for an improved main bonus level for 2007. He also stands to make up to 475,000 from a separate three-year long-term incentive plan.

Although business executive pay has become an issue among the wider public, the figures were greeted with equanimity in the business world.

One fund manager said: "Although he also got a big signing-on fee, I don't think there will be many raised eyebrows. He had a good reputation in the City and was a good communicator internally as well. For instance, there was an e-mail every Friday morning to staff in his business unit detailing to them the achievements and challenges. He got people on side."

Some sources said the fact that Standard insisted on six months' gardening leave suggested a frostiness in relations with the board.

One source said: "It is customary for a fund manager to be on three months of such leave before joining a rival, so six months for a board member does not seem excessive. But if relations were friendly, Standard might have done a less strict deal with him."

One insurance industry executive commented: "If Standard felt he was worth those levels of bonuses in 2006, the performance in 2007 was not so bad that you would think he was not worth at least the same last year."

Crombie, who in just over a year's time turns 60, this week continued to refuse to specify a retirement date. It was widely seen as the reason, together with no public anointment of him as successor, that led Matthews to quit the insurer and join Friends Provident.

FTSE 100 PAYOUTS TOP 1 BILLION

SALARIES, bonuses and benefits paid to FTSE 100 company executives topped 1 billion last year for the first time.

Research by pay consultancy Reward Technology Forum showed that the pay of directors of Britain's top firms increased by 37 per cent, with chief executives receiving an average of 2.9 million.

The bonus that Trevor Matthews will receive is relatively modest compared with some senior business people.

Last year, Bob Diamond, the head of the investment banking arm of Barclays Bank, was the highest paid executive in Britain, receiving 23m.

Although his basic salary was only 250,000, he was also given a performance bonus of more than 10m and more than 12m in share awards.

According to the research, some 81 company directors received annual bonuses of more than 1m.