Standard Chartered has promised its new boss Bill Winters up to £6.5m in shares to cover any losses he may incur in quitting the hedge fund he was previously running.
The exact size of the share awards for Winters, who became chief executive of the bank on Wednesday, will be determined once he has extricated himself from the Renshaw Bay hedge fund which he founded. The next opportunity to issue him shares in Standard Chartered is later this month, although it is unclear whether any losses from leaving the hedge fund – if any – will be determined by then.
If he incurs losses, the shares would then be handed to him in three equal instalments over three years, starting in 2016. There are no performance conditions - he only has to remain in the employment of the bank.
A former investment banker, Winters has been hired to improve the performance of the bank which has had a difficult two years. His predecessor Peter Sands, who had been one of the few bank bosses to remain in their jobs and was once tipped as a potential governor of the Bank of England, had been forced into issuing a series of profits warnings .
The details of the potential share award are contained in Winter’s contract. It shows he is on a salary of £1.15m, and receiving benefits of £35,000 together with an annual £1.15m allowance of shares under a scheme designed to get around the EU’s cap on bankers’ bonuses. He is also entitled to participate in a long-term incentive plan, receiving share awards worth double his salary each year. They will pay out in future years. In addition, around £460,000 a year will be paid into a pension.
Under the terms of the contact, which Winters signed on 5 March this year, he is required to hold 250,000 shares in the bank.
The City welcomed the the respected American banker’s appointment, with shares rising on his first day after he wrote to staff spelling out the importance of the bank’s financial strength. Rumours have circulated for months that the bank will seek to raise funds from shareholders. The shares fell back on Thursday.
When Winters’ appointment was announced in February, it was part of a wider boardroom shakeout. Sands’ departure was not the only exit announced. The bank also said chairman Sir John Peace and four other directors would depart.
Peace is to stand down next year. Another company he chairs, the high fashion retailer Burberry, has been embroiled in a pay controversy. Burberry’s remuneration report was rejected by shareholders last year while earlier this week it disclosed that its chief executive, Christopher Bailey, could receive shares worth up to £50m in coming years through bonuses.
Winters left JP Morgan following a row in 2009 and joined the commission set up in 2010 by the UK coalition to look at whether banks should be broken up. Chaired by Sir John Vickers, the commission recommended a ringfence to be erected between banks’ high street operations and their riskier investment arms.
He also established Renshaw Bay. His contract from Standard Chartered stipulates that he can remain a non-executive director of companies related to Renshaw Bay for 12 months. He can also retain his boardoom role at pharmaceutical company Novartis, which his contract describes as his main non-executive directorship. His seats on the boards of charities Colgate University, The Young Vic and the Print Room remain unaffected.
This article was written by Jill Treanor, for theguardian.com on Thursday 11th June 2015 16.26 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010