Standard Life Falls Foul Of New Pay Rule

One of the City's biggest investment institutions has vowed to retain the new head of its boardroom pay committee despite new guidelines suggesting that such roles should be reserved for longer-serving directors.

Sky News can reveal that Standard Life (LSE: SL.L - news) is one of several FTSE-100 companies which do not adhere to a new recommendation that remuneration committees should only be headed by directors who have already sat on them for at least a year.

Melanie Gee, a former investment banker who joined Standard Life's board last November, became chair of the financial services group's remuneration committee in May.

The proposal relating to these directorships was included in a report this week by a panel chaired by the Legal & General (LSE: LGEN.L - news) chief executive Nigel Wilson.

The group published ten recommendations, including publishing the multiple of bosses' pay to their workforces, in an attempt to improve public perceptions of executive pay following years of bruising battles with shareholders.

In its report, the Executive Remuneration Working Group said: "The position of remuneration committee chairman is often given to a new or inexperienced non-executive on appointment to the board.

"There is no prerequisite to have experience in managing either remuneration issues or the significantly complex personal dimensions which are involved when setting pay and judging performance outcomes."

It added that having more experienced directors in the role "would allow the new non-executive to build the appropriate knowledge of the business, the personalities on the board and understand the views of the company's major shareholders".

The working group also recommended that the Financial Reporting Council, the accountancy watchdog, should update the UK's corporate governance code to reflect this need for more experienced remuneration committee chairs.

Its recommendations are not binding but it nevertheless represents the latest occasion on which Standard Life has found itself on the wrong side of governance guidelines.

The company, which sponsors the Wimbledon champion Andy Murray, found itself the victim of an embarrassing pay revolt at this year's AGM, with 22% of investors rebelling over the bonus framework for chief executive Keith Skeoch.

That backlash was particularly awkward because Standard Life Investments, the company's asset management arm, frequently turns up at company AGMs to protest over governance failings.

In a statement issued to Sky News, a Standard Life spokesman said: "We welcome the report by the Executive Remuneration Working Group and any recommendations which help improve the important role remuneration committees play.

"The Standard Life board believes the most important factor in determining the appointment of the chair of the remuneration committee is ensuring they have the right experience and skills to undertake the role.

It added that Ms Gee was recruited to its board and pay committee role because of her "strong financial services and board experience".

"We do not believe there is a need to review the appointment," the company said.

Ms Gee also chairs the remuneration committee at Weir Group (Other OTC: WEIGY - news) , a large public company which saw its pay policy voted down this year in a binding vote that reflected shareholders' increasing willingness to flex their muscles over boardroom rewards (Other OTC: UBGXF - news) .