Aberdeen Asset Management has been forced to publish additional information about its pay policies in an attempt to quell shareholders' concerns before its annual meeting Wednesday.
One of the first FTSE 100 companies to hold a shareholder meeting since Vince Cable's binding vote on pay was introduced, Aberdeen has hastily updated its pay policies – only published a few weeks ago in its annual report – to reassure investors that a scheme to keep handing out bonuses after directors have left will be abandoned for new recruits. Other potentially controversial elements are the lack of an upper limit on bonuses for the directors, including Martin Gilbert, who founded the firm 30 years ago.
Gilbert is leading a rapid expansion of the business after buying the investment management arm of Scottish Widows from the bailed-out Lloyds Banking Group at the end of last year. He received a £500,000 salary and £5.1m in total for the fund manager's most recent financial year, up 7% on the year before.
The rules that will put pay policies to a vote were introduced last September. The remuneration report – containing the actual pay for last year – will still be put to shareholders for approval, but will remain advisory.
The Association of British Insurers has issued an amber top alert on Aberdeen to highlight potential issues of concern to its members, who control around a fifth of the stock market. Advisory group Pirc is recommending that investors vote against the pay policy but in favour of the remuneration report.
ISS, the influential advisory body, has recommended voting in favour of all the resolutions at the annual meeting and noted that changes have been made to the remuneration policy since it was originally set out in the annual report.
Aberdeen has added the following sentences to its pay policies on its website: "Following further discussions with shareholder representatives, the remuneration committee would like to clarify that, in the case of any new executive director appointment, if the individual's contract were terminated by the company and payment in lieu of notice were made, the committee would normally seek to limit this to base salary, pension and benefits for up to 12 months."
A spokesman for Aberdeen Asset Management said: "As a leading investment company we welcome the introduction of the new voting arrangements, which we believe will form an important part of the dialogue between companies and their shareholders on the important issue of executive compensation."
"We are open and transparent in terms of our remuneration policy and report. We do not believe in rewarding failure and executive bonus awards take account of key financial performance indicators. Three-quarters of any bonus earned is paid in company shares and released in tranches over four years. Bonuses can be clawed back in the event of serious misconduct or a significant failure in risk management."
Services company Diploma, in the FTSE 250 index, holds its annual meeting on Wednesday and will also put its pay policies put to the mandatory vote.
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