The chief executive of life insurer Standard Life is giving up bonuses of more than £500,000 as a gesture to disgruntled policyholders.
Sandy Crombie has declined to accept the annual payments, which comprised a bonus and rewards accrued under a long-term incentive scheme. He made his decision after Europe's biggest mutual life assurer was forced to slash bonuses due to members holding with-profits policies last year.
Mr Crombie's long term incentive scheme payment related to the period between 2000 and 2003 when he was the chief executive of Standard Life Investments. The performance-related annual bonus applied to the period after Mr Crombie took up his current job and November 15th last year.
A spokesman said Mr Crombie had decided not to accept the awards to establish "a clear alignment between his own personal award and those awards streaming through to members".
He felt the benefits to members of the actions he had taken to restore the group's profitability were not yet evident, the spokesman said. "He strongly believes he must establish a clear alignment of his own interests with those of members by declining any annual bonus until the performance of the company is seen to have responded to the actions taken during this last year," a statement from Standard Life said.
"He is confident in the prospects of Standard Life in its chosen markets throughout 2005 in its run up to proposed demutualisation."
Mr Crombie added in the statement: "Without question, 2004 was one of the toughest years in Standard Life's history. Tough but necessary decisions were taken to re-shape, re-energise and re-capitalise the business.
"The company has finished the year in good shape and I am confident we can turn events in a rapidly changing marketplace to our advantage."
The insurer said last January that it was cutting bonus rates on long-term savings policies for the fifth time in two years. The cuts formed part of a shake-up that also included 2,000 job cuts, equity disposals and a decision to float on the stock market in 2006. The decision to demutualise represented a u-turn by the group, which had previously rejected policyholders' calls to consider a flotation.
Although its 2.6 million policyholders could collect estimated average windfalls from the flotation of between £1,000 and £3,000, some voiced anger, claiming they could lose more cash. The society will need the support of 75 per cent of the with-profits policyholders if it is to press ahead with demutualisation. It plans to put the issue to the vote in 2006.
PA