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Standard Life Aberdeen told to prove savings tied to CFO pay deal

Stephanie Bruce: shareholders rebelled over pay package

Standard Life Aberdeen has been told to confirm that it is achieving cost savings tied to the ‘golden hello’ paid to its new chief financial officer.

Stephanie Bruce was hired on a £525,000 salary – 17% higher than her long-serving predecessor Bill Rattray – and will receive a recruitment award worth £750,000.

The company argued that she was forfeiting benefits from her previous role as a partner at PwC.

However, the package sparked a backlash at the AGM in May with 42.02% of shareholders voting against the deal.

The company – which has been a regular critic of other company remuneration policies – agreed to review its own pay deals for senior managers.

In an update to the Stock Exchange it said it will also look at the responsibilities and remuneration of outgoing vice chairman Martin Gilbert in light of the announcement he will leave the firm on 30 September next year.

As a response to the shareholder concerns, Standard Life Aberdeen appointed Jonathan Asquith to the board and as chairman of the remuneration committee on 1 September.

He wrote to investors representing 60% of the asset manager’s institutional shareholders, offering face-to-face meetings or calls, and to the main proxy agencies (the Investment Association, Glass Lewis, ISS and PIRC) to seek feedback on the AGM and the company’s pay policies.

Mr Asquith has so far held 11 meetings and expects to have another five by the end of the year and in the run up to the release of the 2019 full year results. 

The points covered included:

·     recognising that the primary issues affecting the voting decisions were one-off and unlikely to be repeated;

·     further briefing and clarification on the terms of Stephanie Bruce’s appointment and the importance of her strategic role;

·     confirmation that the cost saving targets underpinning Ms Bruce’s sign-on award were being tracked and would be independently verified; and

·     developments to Martin Gilbert’s responsibilities and remuneration in the light of relevant announcements since the AGM.

Mr Asquith said the consultation meetings are proving “valuable and positive” and providing “a useful opportunity to explore other features of the company’s current remuneration structure and remuneration strategy in general.”

He will update the remuneration committee in early December and said the findings will also form a key part of its continuing discussions on both the future approach to executive director remuneration and wider remuneration philosophy and practices across the company.

Mr Asquith will continue to engage with institutional shareholders and will provide a final update on the follow-up of the 2019 AGM vote in the 2019 Annual Report and Accounts and in the 2020 AGM voting guide. 

As stated in the May 2019 AGM announcement, the company expects to seek shareholder approval for a new directors’ remuneration policy no later than at its AGM in 2021 in line with the normal cycle for renewal.

The company said it is keeping the timing of this refresh under review and will bring forward revised policy proposals at the appropriate time.

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