Standard Chartered has bowed to investor pressure and announced plans to halve a £474,000 pension payout for its chief executive.
Bill Winters will now have his allowance slashed from £474,000 to £237,000 from 1 January 2020. The bank’s finance chief, Andy Halford, will also have his pension pay halved from £294,000 to £147,000.
The decision followed lengthy consultations with shareholders and asset management lobby group the Investment Association, which has been agitating for pension payments to be brought in line with the rest of staff.
It came after 40% of Standard Chartered shareholders refused to back the bank’s remuneration policy in May over Winters’ pension cash allowance, which represented 40% of his basic cash pay. Winters faced further controversy after saying that the shareholder protest – the largest revolt at the bank for five years – was “immature and unhelpful”.
Standard Chartered said in a statement on Friday: “The committee concluded that we should implement a change to resolve concerns as swiftly as possible, with the board, including the executive directors, wanting to avoid any distraction from the delivery of our strategy.”
One of the bank’s largest shareholders, the fund manager Schroders, welcomed the move. “We are pleased that the company has listened to shareholders and are very supportive of this move, which brings CEO and CFO pension arrangements into line with the broader workforce, consistent with emerging UK best practice.”
The Investment Association has been urging companies to bring executive pension pay below 25% of their salary, but has ramped up the pressure by setting a two-year deadline for companies to comply with the UK corporate governance code and bring executive salaries in line with the rest of the workforce.
The bank previously defended Winters’ pension pay by saying it represented just 20% of the chief executive’s basic pay. However, it reached that figure by combining his £1.2m cash salary with a further £1.2m in share-based pay, meaning they could compare the pension allowance against a larger £2.4m salary.
But a common calculation used by some investment advisors – which focuses on cash salary only – showed that Winters was taking home 40% of his basic pay in pension. That is the highest for any top executive at a publicly-listed UK bank.
The new pension allowance is equal to 20% of his basic cash pay, but 10% of his combined share and cash salary. Standard Chartered’s UK workers receive a pension worth on average about 10% of their pay.
“We acknowledge that paying part of salary in cash and part of salary in shares has led to some confusion. We will improve our disclosure in our next directors’ remuneration report to explain how salary is set in the same way for all employees,” Standard Chartered said.