Standard Chartered’s departing chief executive, Peter Sands, was paid $5.1m (£3.5m) last year despite opting not to take a bonus under the bank’s long-term share plan because of its poor financial performance.
Sands’ total pay fell from $6.8m after he missed out on a share bonus that was $2.5m the year before. But other elements of his pay increased so that the drop was only $1.7m, the bank’s annual report showed.
Sands’ salary rose to $1.83m from $1.68m and that increase helped bump up the bank’s contribution to his pension from $874,000 to $1.5m. He also received an extra $1.1m “fixed pay allowance” – a payment devised by banks to get round EU caps on bonuses.
Sands’ deputy, Mike Rees – consistently the bank’s top earner – also forfeited the chance to earn a long-term share bonus, which was $6.5m the year before. His 2014 total pay, made up of salary, pension and other payments, fell by $2.6m to $6.95m. The blow of missing out on his bonus was softened by a salary increase to $1.5m from $1.15m and a $3.95m pension payment, up from $516,000 – a one-off jump caused by the salary increase.
Standard Chartered’s shares fell 29% last year after it issued a series of profit warnings as the Asian economies where it makes most of its money slowed down.
The most Sands could have earned last year under the share plan was $8.6m and Rees’s maximum was $7.1m. The bank said they and other executive directors told the remuneration committee in advance that they did not want to be considered for the payouts.
The bank also disclosed that the number of employees paid more than €1m (£710,000) last year rose from 118 to 130 – despite shareholders demanding tougher rules on pay. The top two non-board earners received more than €5.3m and 20 bankers not on the board were paid €2.7m or more.
Standard Chartered has had a grim two and a half years after riding out the financial crisis in better health than any of its UK competitors. As well as suffering falling profits, it has been fined by the US authorities for infringing sanctions against Iran.
Profits fell 30% to $4.2bn last year as the bank was hit by a 32% rise in bad debt charges, extra compliance costs, a $300m fine from the US authorities for breaches of money-laundering rules and problems at its Korean arm.
Sands said earlier this month he had waived his bonus to show leadership as the company tries to clamp down on costs.
Sands, who has been chief executive since late 2006, will leave in June to be replaced by Bill Winters, the veteran US banker.
More than 40% of shareholders voted against Standard Chartered’s three-year pay policy at last year’s annual meeting, reflecting investor fury that pay for Sands and other bosses had risen despite worsening financial performance. They were also frustrated by what they described as the bank’s indifference and lack of communication over their concerns.
Ruth Markland, who chairs the remuneration committee and is leaving the bank, said in the annual report: “A significant part of the committee’s work in 2014 was responding to the disappointing vote received on the directors’ remuneration policy at the AGM in 2014.”
The bank has made adjustments to the pay policy, linking bonuses more closely to long-term performance and judging that performance on a wider range of subjects, including “people, culture and conduct”.
This article was written by Sean Farrell, for theguardian.com on Monday 16th March 2015 15.33 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010