STANDARD Life chairman Gerry Grimstone was forced into a robust defence of the company’s pay policy yesterday as shareholders expressed concern at poor returns on some policies.
He admitted that “bonus” had become a “dirty word”, but said the company designed its remuneration packages to incentivise staff. The management team had been brought in three years ago to transform the company and they had achieved their targets.
His comments at the AGM in Edinburgh came in response to one shareholder who said other professionals, such as doctors and teachers, would be insulted if they felt a need to be incentivised to do a better job. He asked chief executive David Nish what tasks he would not have done had he not received a bonus. Nish did not reply.
The shareholder then accused the chairman of being “complacent” over the firm’s performance while under-performing policies would mean some people losing their homes.
“I take issue with you describing me as complacent,” said Grimstone, explaining that the company had scoured the world for the best people. “If you want a good management team you have to put in place the right incentives.
“We have a properly designed incentive scheme, though the word bonus has become a dirty word,” he said. Pay plans included shares so the executives were motivated to improve the company’s performance.
He added that any shareholder who bought shares at the discounted price on flotation in 2006 had seen a 164.7 per cent return against a 51.6 per cent rise in the FTSE 350 over that period. The company had paid out £2 billion in dividends.
The remuneration report was approved by just under 96 per cent of shareholders and all other resolutions were passed.
Responding to further questions on poor returns for with-profits funds, he said that, unlike the old company, these were now run separately from shareholders’ funds. It would not have been possible to switch a proportion of the recent special dividend or other shareholders’ funds into topping up policies.
Nish said the business now had a “clear strategic focus” and he saw significant opportunities to grow in all its markets. “The last three years have seen Standard Life really step up and there is more to come,” he said.
Nish joined the chairman in urging politicians to ensure any government policies on savings and pensions were designed for the long term. Grimstone admitted that many savings policies had become “far too complicated”.
Keith Skeoch, chief executive of the asset management division, Standard Life Investments, said the company took great interest in the behaviour of companies in which it invested, including tax and regulation. In response to a demonstration outside by members of the Unite union, he said there had been correspondence between Standard Life and a construction company in which it held a stake over alleged blacklisting of trade unionists. “Blacklisting is an issue we take seriously,” said Skeoch.
Before the meeting, Grimstone added his name to those businessmen demanding greater clarity and certainty over the independence debate.
“I am pleased the level of debate is moving into that area, but we have to know exactly what it means,” he said. “We will not hesitate to speak up if we feel the need to do so.”