Standard Life’s chief executive David Nish is stepping down and will be replaced by the head of the insurer’s increasingly dominant fund management arm.
Nish will hand over to Keith Skeoch, who runs Standard Life’s £258bn investment division. Nish is stepping down in August but will be paid his £835,000 salary and all other benefits until June 2016, and will be on gardening leave until April 2016.
The FTSE 100 company, which was mutually owned until 2006, said Nish, 55, had no other job lined up.
Skeoch’s appointment underlines the growth of his business and Standard Life’s move away from traditional products such as annuities and life insurance. The plan was in place before the government let savers cash in their pension pots but the change made the sale of investment products more important to the company.
Standard Life Investment Management’s assets have increased from £57bn when Nish became chief executive. The group’s other assets have fallen as Nish has sold businesses, including the £2.2bn disposal of Standard Life’s Canadian arm announced in September.
Standard Life warns against Britain leaving EU
Standard Life’s chairman, Sir Gerry Grimstone, said the sale of the Canadian business and last year’s acquisition of Ignis Asset Management, which expanded Skeoch’s division, prompted the board to review Standard Life’s leadership in late 2014. With Nish kept informed, Grimstone approached Skeoch about becoming chief executive, he said.
“After the sale of Canada and the purchase of Ignis, we gradually focused on what that meant in terms of personalities and that eventually led to the decision that we have taken,” Grimstone said. “We are very, very familiar with the marketplace and once we identified what kind of person we wanted we realised the right person was very close to home and I approached Keith in February this year.”
Nish joined the Edinburgh-based firm nine years ago as group finance director and became chief executive in January 2010. Skeoch has worked at the company since 1999 and was also a candidate for the top job five years ago.
Grimstone said: “In a sense, he [Nish] has been replaced but it’s more complicated than that because the company is a very different company.”
Nish said: “One of the most important responsibilities of a chief executive is recognising the right time to pass the baton and also to help ensure it is passed on to the right person. Now is the right time for both the group and myself.”
Nish will be entitled to a bonus for this year and the first three months of next year. He will also keep his shares under the company’s long-term incentive plan (LTIP).
His total pay rose to £5.5m last year from £4.2m in 2013, while Skeoch was paid £5.3m, up from £4.4m. The Institute of Directors has said there is a tension between their high earnings and responsibilities as custodians of other people’s money.
Standard Life said Skeoch’s salary as chief executive would be £700,000 and his maximum annual bonus would be 175% of his wages – the same as for Nish.
The new chief executive will be able to earn a maximum of five times his salary under the LTIP. The company announced an increase in the maximum LTIP from 300% to 500% in February, less than a year after its pay policy was first endorsed by shareholders.
Investors accepted the measure in principle at Standard Life’s annual general meeting last month and Grimstone said the company would now seek the backing of big investors for the specific change in Skeoch’s case. Grimstone said Skeoch’s pay would be based more on long-term performance than the arrangements for Nish.