Bonuses slashed at Standard Life

SIR SANDY Crombie, the outgoing chief executive of life and pensions giant Standard Life, has had his bonus cut nearly in half after the group failed to hit performance targets.

Crombie received a bonus for 2008 of £380,000, down 46 per cent on the previous year, according to figures revealed yesterday in the insurer's annual report.

His total package, comprising basic salary, benefits and bonus, fell 15 per cent to £1.39 million from £1.64m in 2007.

Although Standard Life last month reported a small increase in operating profits, its return on "core embedded value" – a key performance measure – fell slightly. A spokeswoman said this affected bonuses for Crombie as well as David Nish, finance director, and Keith Skeoch, chief executive of Standard Life Investments (SLI).

Crombie recently signalled he would leave the business once a successor was found. Both Skeoch and Nish are both in the frame.

The chief executive's level of remuneration saved the business £677,000. Since the resignation of Trevor Matthews, the former head of retail, at the beginning of last year, Crombie has been filling both roles. Matthews received £335,000 in 2008 as part of his severance package.

The spokeswoman said: "There is no reward for failure. You are rewarded on the overall profitability and performance of the business."

Nish saw his 2008 bonus reduced by 37 per cent to £268,000, while the payout to Skeoch fell 32 per cent to £879,000. Nish's overall remuneration fell from £945,000 to £885,000.

Skeoch, who takes a much smaller salary but wins a larger bonus in line with the asset management industry, saw his overall pay fall 23 per cent. In 2007, Skeoch pocketed £1.75m – more than Crombie. In 2008, he made £1.34m.

SLI's total assets under management fell by £12.2bn to £156.8bn at the end of 2008.

Standard Life's non-executive directors received a pay rise. The largest of these was for chairman Gerry Grimstone, whose annual fee went up from £285,000 to £330,000 to "reflect the present day role as chairman of a FTSE 100" company.

The directors' remuneration report said that although actual 2008 total profitability exceeded target set for the year, "a review of the underlying core profits justified reducing the bonuses that would otherwise have been payable to the on-target level".

The reduction in the bonuses comes amid intense public scrutiny of payouts to senior financial sector staff after rising losses on risky debt-backed assets forced leading British banks to seek emergency support from the taxpayer last year.

Standard Life has not accepted any government payouts. When the firm revealed its performance figures last month, a bullish Crombie dismissed fears that Standard Life could be sucked into financial "Armageddon", saying its capital buffer meant the group could survive further dramatic falls in the financial markets.

Standard Life shares closed down 3.8 per cent at 169.6p.