Investment View: Stick with steady Standard but vote against bosses' pay

Until small shareholders like you and me make our voices heard this sort of thing will continue

It's share-award time at Standard Life, at least for finance director Jackie Hunt. The company said in an announcement to the stock exchange that after being handed 95,000 of them, she sold nearly 45,000 at 340p to cover tax liabilities and kept the rest.

It would have looked pretty bad if she had sold the lot because that might send a signal suggesting she didn't have much confidence in her company to keep delivering, at least in the short to medium term.

Should you hold on too, though? Up to a point, yes. Standard Life, in which my family has a small post-demutualisation interest, is never going to set the world alight.

It's a stable, relatively low-risk insurer, which has positioned itself carefully to take advantage of changes to the way financial products are sold and the auto-enrolment of employees into company pension schemes.

Last year the shares took off, and the company delivered decent earnings. It is a steady ship at the moment, so it should continue to perform well enough.

Here's what is hugely disappointing about Standard Life, from the perspective of an investor. This is a company which stewards the investments of millions of small savers and has a huge retail shareholder base (retail meaning you and me as opposed to City institutions).

It should, therefore, be setting an example when it comes to executives' pay. It is not doing so. The company admits that it may indulge in "golden hellos" when it hires externally. It "benchmarks" pay against rivals, rather than assessing its own team against their own performance. Benchmarking has contributed a great deal to the relentless rise of boardroom salaries (because no one wants to pay below the benchmark).

Then there are this year's pay rises. Ms Hunt received a rise in her basic pay of 5 per cent taking it to £565,0000, chief executive David Nish was given 1.9 per cent to take his basic to £790,000 and Keith Skeoch, boss of Standard Life Investments, received 3 per cent to take his to £437,750. Those rises will have an important influence on other elements of their packages, notably bonuses. What's more, there is a new, long-term incentive plan is in the works. These things only ever seem to get more generous.

The total pay of the "big three" amounted to £12m compared to £6.7m a year previously. Standard had a good year, but not that good.This sort of thing can't make life any easier for the (pretty good) governance people at Standard Life who (justifiably) took a shot at BP over poor remuneration practice.

Standard will probably trot out all the usual arguments about there being an international market for top executive talent (not true, companies usually hire from home), the need to keep hold of the top team (even though it is rare for top bosses to be poached and on packages like that, why leave) and the need to "motivate" top talent (when the motivation should be to do their jobs well as is the case with everybody else).

My recommendation on Standard Life shares runs as follows. If you're a long-term investor, hold on. The company ought to provide a solid and steady return. If you're more inclined to trade in and out of stocks there is a case for taking some profits. It sits at a decent premium to book value, although yields nearly 5 per cent, and is not the most profitable of insurers.

The shares probably won't be increasing in value at the rate they did last year (more than two thirds) and there are more exciting opportunities out there.

Whatever you choose, use your votes at the annual meeting and vote against the remuneration report. Retail shareholders make up a big proportion of the shareholding at companies like Standard Life which have either demutualised or been privatised by the state. Until small shareholders like you and me do more to make our voices heard this sort of thing will continue to go on. And ultimately, if you are a shareholder in Standard Life, these people are being paid with your money.

I mentioned Aviva in my recent column on yield. However, if you are not a low-risk income investor there are grounds for taking a chance with this stock.

The company has undergone a shake-up at the top, with a new chief executive, the (relatively) youthful Kiwi Mark Wilson hired from AIA, the Asian insurer.

I have the impression that I've been flogging a dead horse with Aviva for some time. It is, in theory, criminally undervalued at something under 80 per cent of the "book" value of its in-force business, with a propsective yield of 6 per cent, although that is thanks largely to the sharp fall in shares after the recent dividend cut.

Things tend to be darkest before a new dawn, and the City always overdoes things, so it might now be worth getting into Aviva and taking a bet on the new management driving a bounce back in the shares. I make Aviva a speculative buy.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Supporting role: at the Supreme Court, Rhodes was accompanied by a famous friend, the actor Benedict Cumberbatch
booksPianist James Rhodes on the extraordinary legal battle to stop the injunction of his memoirs
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
filmDheepan, film review
Steven Gerrard scores for Liverpool
Arts and Entertainment
Bob Dylan
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?