Standard Chartered CEO Bill Winters and CFO Andy Halford have become an omen for anyone else in finance who thinks generous fixed compensation is a given. It's not. And when it's cut, it has broader consequences.
Standard Chartered's AGM voted this morning to cut the pension allowances of Winters and Halford from 20% of salary to 10% of salary with effect from 1 January 2020. The upshot is that Winters' allowance will fall 50% from £474k to £237k, and that Halford's will fall from £294k to £147k. As a result, the two men will receive an 8% cut to their total fixed pay, for which they will not be compensated.
This isn't the first time Winters and Halford have had a pay cut. When Winters joined Standard Chartered in 2015, executive pension allowances were 40% of salary. Pension allowances were then halved to 20% of salary for 2019, and are now being halved again to 10% from 2020.
Once, falling fixed pay might have been mitigated with rising variable pay (bonuses) for a job well done, but this hasn't been possible ever since the European Union mandated that bonuses must not exceed 200% of fixed compensation. Pensions count as fixed compensation, and therefore Winters and Halford also face a minimum 8% bonus cut for next year.
This is likely to grate, particularly as Winters onced fancied himself as CEO of JPMorgan, a position whose current incumbent was paid a total of $30m for 2018, compared to Winter's own $6m for the same period.
Nonetheless, both Winters and Halford are fine with their pay cuts, and the Standard Chartered renumeration committee has today 'thanked them for their willingness to accept these changes.' They weren't happy to begin with though: Winters said in July that investors were "immature and unhelpful" for focusing on his pension and that the criticism amounted to "hysteria." Four months on, he's clearly decided to roll over. Others may yet do the same.
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