Bank CEO takes pay cut after investor rebellion

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Bill Winters, Group Chief Executive Officer of Standard Chartered Bank, looks on during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 24, 2018. Photo: REUTERS/Denis Balibouse

Two senior executives at Asian-focused bank Standard Chartered (STAN.L) have been forced to take pay cuts after a revolt by investors.

Bill Winters, the chief executive officer of Standard Chartered, and Andy Halford, the bank’s chief finance officer, have both accepted an 8% reduction in their fixed pay.

The cut amounts to £237,000 less per year for Winters and £147,000 less per year for Halford.

Winters will still earn £2.6m in fixed pay after the cut, with the opportunity to make up to £7.8m if all bonus conditions are met.

Halford will make £1.6m in base pay and be eligible for up to £4.8m including bonus.

The reductions in fixed pay follow investor anger over the pay arrangements of the two executives. Almost 40% of investors voted against the bank’s remuneration policy at its annual general meeting in in May.

Investors were concerned at the amount of cash Winters and Halford were paid in lieu of pension contributions. Both executives received amounts worth 20% of their base salary, which in Winters’ case included share-based payments.

Investment Association (IA) guidelines state that total cash in lieu of pension contributions for CEOs should be capped at 25%. When the share-based payments are stripped out, Winters’ cash in lieu of pension payments amounted to 40% of his basic pay.

Even when share-based remuneration is included in ratio calculations, Winters’ and Halford’s cash payouts were double the level of cash in lieu of pension contributions allowed for the rest of the banks’ staff. IA guidelines say pension contributions for staff and executives should be the same.

READ MORE: Lloyds exec defends CEO's £2.8m pay: 'People like a winner'

Winters said in an interview with the Financial Times in July that the investor revolt over his pay was “immature and unhelpful.”

However, London-listed StanChart said on Friday it has agreed to change the pay deals after listening to shareholder concerns.

Christine Hodgson, chair of the bank’s remuneration committee, said: "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.

“The changes we are making will align the current executive directors' pension allowances with other UK employees with effect from 1 January 2020.”

Standard Chartered said paying Winters salary part in cash and part in shares “has led to some confusion” over how to measure the level of cash in lieu of pension contributions he received.

“We will improve our disclosure in our next directors’ remuneration report to explain how salary is set in the same way for all employees,” the bank said.

Banks’ use of cash payments in lieu of pensions contributions have proved controversial. HSBC (HSBA.Lcut back on the policy in March following investor criticism and the CEO of Lloyds Bank (LLOY.L) was forced to appear before MPs in June to justify his level of cash payments in lieu of pension contributions.