StanChart chairman defends bonuses against investor criticism

[LONDON] Standard Chartered would risk a staff exodus if it cut bonuses, chairman John Peace said on Wednesday, responding to investor anger over high pay when the bank's shares have tumbled and there will be no final dividend for 2015.

At the bank's annual shareholder meeting, Mr Peace was asked by one shareholder why Standard Chartered's overall incentive pool had only been trimmed by a fifth in 2015 while dividend payouts fell 83 per cent and the bank reported a loss.

"...all I can say is if we were not to pay a bonus pool to junior staff and to managers who are highly marketable, we would not have a company," he said.

Some prominent investors have said they will vote against the bank's new pay policies, joining a wider revolt among shareholders over soaring executive pay levels at a number of British companies, including BP.

Royal London Asset Management has said it would vote against the 2015 remuneration report at Standard Chartered, criticising high pension policies which it said boosts the level of pay unrelated to performance.

The result of a shareholder vote on the bank's new pay policy is expected later on Wednesday.

Standard Chartered's shares are down 48 per cent since June last year, when new chief executive Bill Winters took over with a mandate to repair the bank's balance sheet and restore revenue growth.

In February, the bank reported its first full-year annual loss in 26 years, hit by the costs of that restructuring and weaker commodities prices.

Mr Winters said then that the bank would try to claw back bonuses paid to staff deemed responsible for its current woes, a process experts said would be fraught with legal difficulties.

But Mr Peace said at the annual meeting that the bank was not pursuing clawbacks where executives followed the bank's risk and lending policies at the time, even if the loan subsequently turned bad.

He said clawbacks would only apply where there was "evidence of inappropriate behaviour." StanChart said in February last year that Peace would step down in 2016, after giving Mr Winters time to settle into his role.

Mr Peace told shareholders the bank was making progress on finding his successor but had nothing more to report.

The announcement of his departure last year came as part of a broader overhaul of the board in which the bank's three longest serving non-executive directors stepped down following intense pressure from investors after the bank's shares fell 29 per cent in 2014.

The bank has still not given an exact departure date for Mr Peace, nor identified his successor.

REUTERS