Sandy Crombie, the chief executive of Standard Life, has forfeited about £500,000 in bonuses owed to him as part of his 2004 remuneration package and promised not to accept future bonuses until he has begun to restore its profitability.
The move comes less than a year after it was revealed that the group's former chief executive, Iain Lumsden, saw his pay package for 2003 rise to more than £1.1m, at a time when policyholders' savings were struggling and profits were plummeting.
The decision under Mr Crombie to align executive pay with performance is the latest in a series of strategic shifts within Standard Life ahead of a demutualisation planned for April next year. However, the group yesterday admitted that its search for a new finance director to help it prepare for a flotation could still take another six months. The insurer said last year it was looking for a finance chief with experience at a public company.
Part of the £500,000 is owed to Mr Crombie for his time as chief executive of the group's investment business under an incentive scheme set up four years ago.
Mr Crombie, who succeeded Mr Lumsden last year, said yesterday he did not believe the incentive schemesufficiently considered the interests of members. John Hylands, the current finance director, has also agreed to give up his entitlement from the long-term incentive plan.
Mr Crombie said: "Without question, 2004 was one of the toughest years in Standard Life's history. Tough but necessary decisions were taken to reshape, re-energise and recapitalise 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.
"We finished the year with a strong balance sheet, with global business at about the same level as the previous year, with service standards as high as ever, with the issues identified during 2004 having largely been addressed. I hope members will accept my decision relating to reward as a principled decision in respect of the past as well as an expression of my confidence in the future."
Gerry Grimstone, the chairman of the group's remuneration committee, said he had been minded to award Mr Crombie a higher bonus as a result of his decision to forfeit his entitlement from the long-term incentive plan. However, he said Mr Crombie had also rejected his regular annual bonus.
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