Emerging markets bank Standard Chartered (STAN) has been forced into a climb down on pay.

Around 40% of the shareholder base failed to back the remuneration policy at the company’s AGM in May, after the bank reduced chief executive Bill Winters (pictured below) pension allowance from 40% to 20% of his salary.

What remained contentious were changes to the definition of his pay. This meant that in real terms, the level of contributions to the boss actually went up, and it was the same for finance chief Andy Halford too.

Winters didn’t help matters by describing shareholders’ actions in raising concerns as ‘immature and unhelpful’ in a newspaper article.

BOWING TO SHAREHOLDERS PRESSURE

While the wider definition of the executives' remuneration will remain for now, the pension contributions for both Winters and Halford have been slashed in half to 10%, in line with other employees of the bank, with effect from 1 January 2020.

This means that Winters’ pension allowance will reduce by 50% from £474,000 to £237,000 a year. Andy Halford's pension allowance will be cut from £294,000 to £147,000 annually.

Christine Hodgson, chair of the company’s remuneration committee, says: ‘I would like to thank Bill and Andy for their willingness to agree to these changes and to thank our shareholders and their representatives for engaging constructively with the remuneration committee, and for the strong support that they share with the board for our executive directors.’

READ MORE ON STANDARD CHARTERED HERE

‘Shareholder pressure can make a difference’, said AJ Bell investment director Russ Mould.

POKING AN ANGRY BEAR

‘Up until today the company has been effectively poking an angry bear when it comes to addressing investor concerns. So why did Standard Chartered go down this road in the first place?

‘There is an argument that companies compete in a global marketplace for executive talent and they therefore will look to do whatever they can in terms of rewards to attract and retain this talent.

‘This argument looks stronger when shareholders are also being richly rewarded, yet since Winters took charge in June 2015 the company has posted a total return of -20.5%.’

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Issue Date: 08 Nov 2019