Simon English: David Nish is an affable and competent CEO, but is he really worth £5m a year?
Tuesday 02 April 2013
Outlook On the phone, David Nish is an affable and engaging fellow, who doesn't seem to take himself too seriously and doesn't give the impression that he regards his time as much more valuable than yours.
His time almost certainly is more valuable than yours, but it is tempting to feel that the best chief executives are also those most able to at least hide their disdain for the riff-raff. So points for that.
That doesn't change the fact that, it is somewhat sad to report, he is absurdly overpaid. Not by the standards of his peers, it is true, but the only way for executive pay to sensibly align downwards is for someone to take a stand and try to influence this supposedly hyper-competitive market by seeing if they can find a competent boss to rub along on, let's say, £2m a year.
Plainly, that someone isn't going to be Standard Life, which is disappointing in many regards, not least that as a major institutional investor it has sway over the pay at other large companies. If it voted against the salaries of top bosses, they might have to come down. It can't really do so with a straight face, having paid its top three executives £10m for 2012 alone (they all got other rewards that will vest later on too).
The Nish numbers go like this: A salary of £775,000; "benefits" of £18,000; pension payments of £232,000; a bonus of £1.2m; and "long-term incentives" of £2.76m – £5m in all, thanks very much.
Mr Nish has done a more than competent job of running a complicated and important business for the last few years, but we won't really know how good he has been until some time into the future. Those "long-term" incentives aren't that long term at all.
Moreover, Mr Nish has been paid and will continue to be paid almost as if he set up this business, as if he were solely responsible for its success or failure. Since Standard Life has been around since 1825 there are a few other people who might think they are due some of what Mr Nish is now getting.
These payments, and the £4.3m trousered by Keith Skeoch and the £2.5m enjoyed by Jackie Hunt, are entrepreneurial rewards for managerial work.
The notion that there aren't available people who could replace these three and do at least as well for much less money is ridiculous, but that's the idea the insurer's remuneration committee, led by Crawford Gillies, has to stick by.
One wonders whether the folk on the remuneration committee genuinely believe what they say, or if they know they are part of a conspiracy to drive up executive pay, hoping to cash in themselves at some point.
A selection of dribbling nonsense from the remuneration report: "balanced scorecard", "strategic metrics", "appropriately stretching", "relative investment performance gateway", "personal performance underpin".
All of this is designed to suggest there's a direct link between Mr Nish's goals and those of the ordinary investor who got a few thousand shares when the insurer ditched mutuality and joined the stock market in 2006.
There isn't really.
And the main joke of it is that Mr Nish's pay isn't even that outlandish. Indeed, if he were minded, and doubtless with the help of Crawford Gillies, Mr Nish could make some sort of claim to being underpaid. Perhaps next year he will do just that.
His predecessor at Standard Life, Sandy Crombie, got knighted by Gordon Brown. If he sticks around a bit, Mr Nish will get gonged too, for services to something or other. When he does, that gong won't be nearly big enough to disguise the truth that the person who did best out of David Nish's reign at Standard Life was David Nish.
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