The board of Standard Life is facing a significant revolt at its annual general meeting today over its about-turn on demutualisation and the pay rises awarded to top executives.
A number of vocal policyholders are set to challenge the board on the pay packages awarded to its top management while millions of customers face shortfalls on their endowment policies.
David Stonebanks, the policyholder who had his demutualisation campaign thrown out by the company last year, believes that thousands will register their anger by voting against the remuneration report. The company is not obliged to act on it and Standard has said it is unlikely to change its pay to directors regardless of the outcome, provoking ire among policyholders.
"If policyholders vote against the remuneration report and the board refuse to change what they have been paid, then I will think about pushing for a vote of no confidence," Mr Stonebanks said. He has already told his 3,000 supporters to vote against directors' pay.
Sandy Crombie, chief executive of Standard who took over when Iain Lumsden left abruptly in January, will have to explain why it is now facing "capital constraints" and needs to demutualise.
Policyholders will want to know why the board convinced them not to demutualise four years ago, when the company was brimming with surplus capital and why Mr Crombie earned £743,000 in bonuses and salary last year, and had a £866,000 rise in his pension fund. Mr Lumsden left with nearly £1m in pay and bonuses, and saw his pension go up by an additional £48,000 a year, giving him £349,000 a year for life. The three non-executive directors who are up for re-election are also set to face a challenge to their appointment. Many policyholders believe they have allowed the board to mis-manage the company without accountability.
Sir Nicholas Monck, Alison Mitchell, the former Radio 4 journalist, and Roy McLaren are all on the investment committee at the company. It oversaw a policy of heavy investment in equities throughout a bear market that has seen billions wiped off policyholder funds.
Ronnie Sloan, an actuary and policyholder who has long campaigned for better corporate governance at Standard, will demand to know why Gerry Grimstone, who has been appointed to the board but not yet elected by policyholders, was made chairman of the remuneration committee in January. He signed off this year's pay awards.
Mr Sloan also wants to know why no alternative plan is being put forward. "Where is plan B? What happens if only 74 per cent vote in favour of demutualisation?" he will ask today.