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Group is 'well positioned' says CEO

Standard Life shrugs off volatility and backs EU membership

Keith SkeochStandard Life unveiled another year of growth in volatile markets and its chief executive said the company favoured Britain remaining in the European Union.

Keith Skeoch (pictured) said markets will remain “choppy” but he expects them to finish the year higher.

He added that the Edinburgh-based company was “prepared” for Britain leaving the European Union but said it was in the best interests of customers that it continued to have access to the single market.

Mr Skeoch told a media briefing this morning that the company was awaiting news on the negotiations over a new deal between Britain and the European Union.

He said the company was “non-political” but added: “I happen to believe that it would be in the best interests of customers and clients that we continue to benefit from access to the single market.

“Having said that, if the people decide it is Brexit (Britain exiting the EU) we are a global business and we will be well prepared, and we will ensure we remain in a good place to serve customers around the world.”

On the current market volatility, he said the group did not have a great deal of exposure to risk based markets across its asset classes and performance was ahead of one year and three year benchmarks.

“Our long range performance remains intact,” he said. “Markets are driven by geo-politics and remain choppy. They represent good value but are not yet a screaming buy. I think they will finish the year higher than they are today.”

In the company’s statement, he said: “During 2015 Standard Life has made considerable progress towards creating a world-class investment company against a backdrop of volatile investment markets and an evolving regulatory landscape.

“We have increased the assets that we administer on behalf of our clients and customers to £307bn with almost two thirds of these assets now coming from our growth channels. Investments are at the heart of what we do and we now manage £253bn of assets across the globe driven by strong investment performance.

“We continue to see the benefits of our expanding distribution capabilities and strategic relationships with 67% of net inflows of £12.6bn into our Institutional and Wholesale Growth Channels coming from outside of the UK.

“We also continue to build momentum in pensions and savings across our workplace and retail channels. Regular contributions into our workplace pensions continue to grow strongly while our wrap platform attracted record net inflows and continues to lead in the advised platform market.

“While the difficult conditions in global financial markets may persist for some time, Standard Life remains well positioned to meet the needs of clients and customers around the world.

“The breadth of our investment propositions, underpinned by strong investment performance and innovation, combined with our strength in pensions and savings, the power of a trusted brand and a strong balance sheet, means that we have a well-diversified and resilient business that continues to deliver for customers and clients as well as shareholders.”

The company grew its business overseas, with 67% of net inflows of assets coming from overseas.

Assets under administration rose 4% to £307.4 billion driven by net inflows of £6.3bn, against £1bn in 2014.

As with other pension providers it also reported benefits from the auto-enrolment programme, adding 250,000 customers through this process. These new customers contributed to a 9% increase in regular contributions into workplace pensions.

Group operating profit before tax was 9% higher at £665m and it proposes a final dividend of 12.34p making a total of 18.36p, up 7.8% for the year.

Remuneration 

Since stepping down (last summer), and while on garden leave, former chief executive David Nish will, in line with the terms of his executive service agreement, continue to receive his base salary of £835,000, his allowances and all benefits. During this time restrictions are in place on his ability to take up further employment and he remains available for consultation to the group. He will continue to be eligible to receive bonus under the rules of the group annual bonus plan during this period (pro-rated for time).

From 1 April 2016 to 30 June 2016 he will be entitled, under the terms of his Executive Service Agreement, to payment in lieu of notice paid in instalments and subject to mitigation.

Keith Skeoch‘s base salary is £700,000, an increase of £200,000 from his previous base salary as chief executive of Standard Life Investments. SL said it reflects his promotion and has been positioned at a level below the median position for companies of our market capitalisation and other FTSE 50 chief executives. It is also circa 16% lower than that paid to his predecessor, David Nish.

Details:

·   A pension opportunity of 27.5% of salary or an alternative cash allowance of 25% of salary, unchanged on promotion

·   A maximum short term bonus opportunity set at 175% of salary. This is a significant reduction on the maximum opportunity in his previous role of 365% of salary as we increased the importance of variable remuneration now delivered over the long term.

·   A maximum opportunity under the Standard Life Executive Long-term Incentive Plan (Executive LTIP) of 500% of salary based solely on stretching group-wide performance measures and vesting over five years.

The performance targets are measured over three years with awards vesting after five years. In his previous role as Chief Executive, Standard Life Investments, Mr Skeoch had a long term maximum opportunity of 400% of salary of which half vested over three years (based solely on Standard Life Investments’ performance) and the remainder over five years.

As a result of the changes highlighted above a higher proportion of the variable remuneration is based on the long term performance of the Group and subject to malus and clawback over the long-term. It also aligns Keith’s remuneration to the longer term shareholder experience for an investment company such as ours. The 500% maximum award limit under the Executive LTIP was approved as part of our policy vote at the 2015 AGM.

·   A shareholding requirement of 500% of salary (increased from 300% of salary). Keith Skeoch must maintain this value in the form of Standard Life plc shares during employment and for a period of one year following his departure from the Group.

 

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