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StanChart’s shareholders revolt against CEO’s high pension but Temasek is ok with it

The UK Financial Times reported yesterday (21 Mar) that Standard Chartered is facing “an investor rebellion” over its CEO’s pay after the bank changed how it calculated his pension in a way that falls foul of UK corporate governance guidelines.

This year, Standard Chartered Bill Winters will receive a pension allowance of £474,000, which is the highest of any chief executive of a large UK-listed bank.

StanChart defended Mr Winters’ high pension allowance saying that it was equivalent to only 20 per cent of his “total salary”.

One big StanChart shareholder rebuked the bank, saying that the change was in “clear contravention” of the corporate governance guidelines, which stipulate that “only basic salary should be pensionable”. For Mr Winters, StanChart decided to use “total salary”, which included a share payment.

Another substantial shareholder remarked, “Shareholders are going to be crawling all over it — it’s not going to slip through. If anything, they have made it worse.”

A top-10 shareholder described what StanChart did for its CEO as “an amazing, daft decision at a time when Standard Chartered has bigger issues”. Shares in the bank have fallen 19 per cent in the past year, underperforming many rivals.

Shareholders are currently pressurizing StanChart to lower its CEO’s pension before a vote on his pay at the company’s annual meeting in May. Apparently, among the public listed banks in UK, StanChart is the only one calculating its chief’s pension as a proportion of total pay rather than the basic cash salary.

Luke Hildyard, executive director of the High Pay Centre, a UK think tank on corporate governance, told Financial Times, “This is a brazen but not very convincing attempt to make the pension award look less excessive than it actually is.”

Meanwhile, shareholders at other UK banks like Lloyds Banking Group, Barclays and Royal Bank of Scotland are also increasingly questioning the high pension payouts of their CEOs.

However, Financial Times reported that StanChart’s biggest shareholder, Temasek, did not seem to be perturbed by the matter.

Financial Times reported, “One person close to Temasek, StanChart’s biggest shareholder, said it did not share other investors’ concerns on pay at the bank.”