Standard Life Aberdeen suffered a rare rebuke at the hands of other UK active fund managers over executive pay at its annual meeting, including top 10 shareholders M&G and Jupiter.
It is unusual for active fund managers to break ranks and vote against a rival’s pay report but shareholders owning 42 per cent of SLA stock did so at the group’s annual meeting. The rebellion came after proxy advisers Institutional Shareholder Services and Glass Lewis recommended rejecting the pay report.
“We don’t typically like to throw stones from our glass houses — but this was one occasion where we had to take a stand,” said one large shareholder. “We tried engaging with the company but that didn’t seem to work.”
Other managers to vote against the pay report included Janus Henderson, HSBC Global Asset Management and Axa Investment Managers. Scores of institutional investors also voted against SLA, including Norway’s sovereign wealth fund, another top 10 shareholder and influential North American and European pension funds.
In a further embarrassment for SLA, the Investment Association, the UK trade body, gave the company’s pay report an “amber top” in its guidance to members, meaning it raised concern over corporate governance. SLA is a member of the IA and Keith Skeoch, its chief executive, sits on its board.
At least two large UK shareholders said their objection was the £600,000 base salary and potential 350 per cent bonus offered to Martin Gilbert, the former co-chief executive who stepped down in March to become vice-chairman. Shareholders said his pay was out of step with his role.
ISS and Glass Lewis advised clients to vote against SLA’s remuneration report, citing concern over the pay of Stephanie Bruce, the new chief financial officer. Ms Bruce is due to join from auditor PwC next month and will receive a salary of £525,000, almost 17 per cent more than her predecessor Bill Rattray, as well as company shares worth £750,000.
Several shareholders raised objections to Ms Bruce’s pay in talks with SLA before the May 14 annual meeting.
In response, SLA agreed to apply performance conditions on Ms Bruce’s award. This, though, was not enough to persuade a large minority of investors to support the report.
Douglas Flint, SLA’s new chairman, has taken part in discussions with shareholders. The vote by HSBC’s asset management arm is another source of awkwardness, as Mr Flint was previously chair of the bank.
Mr Flint defended Ms Bruce’s pay deal. “We wanted to attract the best person for the role, and a talented person from outside our industry,” he told FTfm.
“Current corporate governance guidelines allow for buying out deferred pay but not to compensate someone moving to a deferred pay structure. This creates a barrier for financial services companies attracting senior executives from outside our industry.
“If we are serious about addressing board diversity, we have to have a discussion about removing the obstacles which serve to perpetuate the status quo.”
Most shareholders that voted against the report were institutional investors with small stakes in SLA, according to data compiled by Proxy Insight, the research company. That will be of little comfort to SLA as these include many institutions from which it hopes to win business as it tries to become a global player.
This year’s proxy season has been marked by high levels of dissent over the pay awards of fund management bosses.
At Schroders, the £424bn UK-listed manager, as many as a quarter of independent investors voted against the pay report. ISS and Glass Lewis had urged investors not to back it because of the £6.2m bonus awarded to Peter Harrison, Schroders’ chief executive.
More than a third of independent shareholders at Amundi, Europe’s largest fund manager, voted against the pay packet of Yves Perrier, the chief executive.
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