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StanChart pay saga ends

Bill Winters and Andy Halford have accepted a pension cut, following an investor backlash
November 12, 2019

Though its shares have outperformed its fellow London-listed bank peers since the start of this year, Standard Chartered (STAN) has been defined by questions of executive remuneration in 2019.

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This week, in response to a shareholder backlash, the emerging markets-focused lender reached an agreement with chief executive Bill Winters and chief financial officer Andy Halford to cut their pension allowances from 20 to 10 per cent from next year. In both cases, this amounts to an 8 per cent cut to fixed pay, which the bank defines as salary and pension allowances combined.

The saga began when the bank’s remuneration committee changed the way it calculated executive pensions, agreeing to pay out 20 per cent of the total cash-and-shares salary, rather than the cash portion. Because Mr Winters’ £1.185m basic cash salary is matched in share payments, this had the effect of doubling his pension pay-out.

Though the remuneration policy was approved at the lender’s annual general meeting in May, more than a third of voting shareholders objected. Mr Winters then stoked investor ire by describing the pushback as “immature and unhelpful” in an interview with the Financial Times.

Standard Chartered says the changes mean its executives’ pension arrangements are now on the same level as the rest of UK employees. The bank has also committed to improve its disclosure standards, and show how executive pay aligns with the wider workforce and corporate governance standards.

“There is an argument that companies compete in a global marketplace for executive talent and they will look to do whatever they can in terms of rewards to attract and retain this talent,” said Russ Mould, investment director at platform provider AJ Bell. “This argument looks stronger when shareholders are also being richly rewarded, yet since Mr Winters took charge in June 2015 the company has posted a [negative] total return.”