St James’s Place defends ‘windfall’ payouts to executives

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St James’s Place has defended its pay strategy after shareholders expressed their disquiet at the “windfall gains” due to executives through a share plan.

More than a fifth of shareholders voted against the remuneration report in the group’s annual meeting in May, which awarded outgoing chief executive Andrew Croft £3.1mn and chief financial officer Craig Gentle £2.3mn.

Remuneration has come under scrutiny after warnings that higher pay in the US is luring talent and company listings away from the UK.

The FTSE 100 wealth manager rejected calls from a “minority” of shareholders who argued its remuneration committee should have cut the number of shares granted in 2020 to take account of the subsequent share price moves.

The company’s share price in March 2020, pushed down by the Covid-19 pandemic, resulted in SJP’s executives being granted 44 per cent more shares than the previous year, despite the company capping the share plan at 200 per cent of base salary.

SJP’s share plan allows executives to be rewarded with shares, which are “vested” for three years, with executive directors required to retain these shares for a further two years. In 2020, this was capped at 200 per cent of base salary, which rose to 250 per cent for 2022. Croft had £1.7mn in vested shares at the end of 2022.

SJP said on Wednesday it would not adjust the number of shares granted in 2020 because at the time it had already cut executives’ bonuses and had frozen the share price grants at their 2019 level.

It said reducing the number of shares awarded would risk “damaging the credibility” of the share scheme, as no upward adjustment could have been made in a previous year when the share price had risen at the time of the grant, resulting in a reduced number of shares being awarded.

“If there had, instead, been a share price ‘spike’ at the time of the award, the committee would not have increased the size of award in order to align it with the size of the previous year’s award,” the remuneration report said.

It added that the company’s directors were not insulated from the impact of the low share price on shares they had been awarded in previous years.

SJP’s share price has dropped 38 per cent since the start of this year as its business model has come under scrutiny. It is now lower than the March 2020 level.

Last month, SJP announced a change to its fee structure, after the Financial Times revealed it was under pressure from the Financial Conduct Authority to overhaul its fee structure.

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