£10m pay-out as Standard Life rewards directors

Chief executive  David Nish nearly doubled his remuneration to �5m. Picture: Contributed
Chief executive David Nish nearly doubled his remuneration to �5m. Picture: Contributed
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STANDARD Life’s top three directors shared close to £10 million in bonuses in 2012 with the chief executive of the insurance giant, David Nish, nearly doubling his remuneration to £5m.

Keith Skeoch saw his pay rise to £4.3m from £2.6m, thanks mainly to a bonus from his role as head of Standard Life Investments (SLI), while finance director Jackie Hunt saw her overall pay rise to £2.5m from £1.4m.

Crawford Gillies, chairman of the remuneration committee, said boardroom pay was influenced by the 
committee’s view that “this has been a very strong year” for the insurer.

In a statement, he said: “During 2012, the business delivered exceptional financial performance demonstrated by 65 per cent growth in operating profit before tax to £900m and 61 per cent growth in our share price over the year.

“We also continued to deliver on our key strategic priorities and made strong progress towards delivering our goal of embedding a culture that places the group’s customers at the head of everything it does,” he added.

The remuneration report, published yesterday in the annual accounts, said the trio of executives will have their base rate of pay raised this year “in line with increases awarded across the group’s wider work force”.

Nish saw his £775,000 base rate rise 1.9 per cent to £790,000. Skeoch got a 3 per cent increase, from £425,000 to £437,750. Hunt was awarded a 5.1 per cent rise in her base salary to £565,000.

This came on top of a 7.5 per cent increase in 2012, which the company said was “in line with our policy of moving new appointments to a competitive level of pay over time as the individual becomes established in the role”.

Breaking down the packages, in addition to his salary Nish received a £232,000 cash payment in lieu of pension. He also received a £1.2m bonus, of which £511,500 was deferred for two years.

Under the company’s long-term incentive plans (Ltips), he received an additional £2.6m vesting this year. He was granted a further 665,750 shares – worth £1.5m at the time of the award – which will vest in 2015.

Skeoch took £106,000 in lieu of pension and a bonus of £1.5m. This was broken down to include an initial group cash bonus of £169,150, a deferred bonus of £62,900, plus an additional £1.3m bonus from SLI. This year he will receive incentive plan shares worth £2.3m. In addition, he was granted 730,176 shares – worth £1.7m at the time of the award – that will vest in 2015. Both of the directors’ three-year Ltip shares awarded last year depend on the group reaching operating profits of £825m in 2014.

Hunt took a cash pension pay-out of £132,000 and a cash bonus of £733,000, of which £299,388 is deferred. Under the group’s long-term incentives, she will be awarded a further £1.1m this year. In 2015, she will benefit from 288,581 awarded shares subject to performance criteria. Gerry Grimstone, group chairman, saw his pay hold steady at £350,000.

Last year, the company largely avoided a shareholder revolt over boardroom pay with more than 95 per cent of investors backing the remuneration report. The current report will be put to a shareholder vote at the annual general meeting next month. But shareholders were recently mollified when the board announced a £302m special dividend, the same day as rival Aviva cut its pay-out.

Gillies added: “We will continue to consult with investors during 2013 with a view to putting a new incentive arrangement to shareholders for approval in 2014.”