Standard Life’s board will this week face questions from investors over the rationale behind its £11 billion tie-up with Aberdeen Asset Management (AAM).
Tuesday’s AGM at the EICC in Edinburgh will be the first time shareholders will have had a chance to quiz the board following the announcement of the proposed deal.
Documents last week revealed that the tie-up to create Standard Life Aberdeen will result in the loss of about 800 jobs. Shareholders are also likely to have raised eyebrows over the estimated £98 million fees bonanza for bankers, accountants and lawyers working on the deal.
The board could also face questions over governance after criticism about the bumper size of the new board of the merged company and incentivisation bonuses outlined in the merger documents.
Last year Standard Life suffered a shareholder protest vote over pay policies, although chief executive Keith Skeoch volunteered to take a cut to the maximum amount he could be awarded under a bonus plan and was paid £2.75m in 2016, down from £3.46m the year before.
The merger of Edinburgh-based Standard Life and AAM is aimed at creating cost savings that could add up to £200m a year, although some analysts believe that figure could be conservative.
The AGM will also come as speculation continues over the future of the group’s insurance business which includes its pensions and savings offerings for individuals and companies. Analysts at RBC have argued that as the AAM deal completion nears, investors will begin to focus on a potential sale of part or all of the business following the shift in recent years towards its investment management operations.
RBC believes there are three options – an acquisition of the business by a consolidator, a sale of its annuity book or a spin-off of the business through a combination with a similar player. Skeoch has said in the past that the group hasn’t ruled out selling the annuity business, although he recently said that for the business to achieve its ambition of being a world-class investment company it will have to “bring together the best from our successful active asset management, wealth management and pension and savings businesses”.
The 800 job cuts announced last week are due to be phased over three years from a combined global workforce of approximately 9,000 people.
The firms said they expect “natural turnover” to account for much of the reductions, while other steps will be taken to minimise compulsory redundancies.
The prospectus highlighted a need to maximise operational efficiencies following the merger.