St James’s Place defends payouts for bosses

St James’s Place has defended its decision not to cut share awards for senior staff last year after a mini-investor revolt over its remuneration policy.

Britain’s biggest wealth manager timed share awards at the height of the pandemic that hit bosses last year, but some investors argue that a drop in the group’s share price at the time of the concession should mean that the payment was less.

More than 20 per cent of the company’s shareholders voted against its proposed report on directors’ remuneration at its annual general meeting in May.

But SJP, which has suffered a sharp decline in its share price this year, told investors on Wednesday that reducing the company’s long-term incentive plan “risked damaging its credibility.”

SJP shares rose 4.42 per cent or 29.20 pence to 689.80 pence on Wednesday, having fallen more than 40 per cent in the last year.

In Wednesday’s update, the wealth management group noted that certain Shareholders were concerned about the outcome of the Performance Share Plan 2020 grant award.

It said: “This minority of shareholders said they felt the committee should have applied a downward discretionary adjustment to the performance-based vesting outcome to take account of the fall in the share price at the time of the vesting. concession in 2020 and the effect of this”. on the number of shares granted.

“Furthermore, they considered that the explanation provided in the remuneration report could have been improved to help shareholders evaluate the outcome of the vesting decided by the committee.”

SJP shares fell about 3 percent in 2020, recovering from a lockdown price drop of about 40 percent.

In response to these concerns, the SJP said: “Applying a reduction to the result of the award of rights in addition to the restriction already mentioned above, risked damaging the credibility of the PSP, also taking into account that no reciprocal upward adjustment in a prior year, when the share price had “skyrocketed” at the time of grant, resulting in a reduced number of shares awarded.

SJP shares are up more than 20 percent in 2019.

The SJP remuneration committee said it believed it had acted in the “best interests” of the group and stakeholders by not applying a downward adjustment to the performance-based vesting outcome.

The group said it was “grateful” for the investor response and said it would “take into account” shareholder views on the issue in the future.

It added: “The Board will continue to engage with shareholders and their representative bodies in accordance with our usual practice and will reflect their feedback, as appropriate, in the 2023 Directors’ Remuneration Report.”

SJP’s share price has fallen more than 40 percent so far this year.

Last month it was forced to scrap its controversial exit fees for new bond and pension investments in a revamp of its fee structure after facing scrutiny from regulators.

SJP has long faced accusations of excessive fees to clients for financial advice and early withdrawals.

The restructuring will see the “vast majority” of new pensions and bond investments charge up-front and ongoing fees, but with no early withdrawal or gestation period charges.

Reports of the move sparked a sell-off in SJP shares as investors feared the potential impact on the group’s results.

However, this week it emerged that new SJP pension fund clients could still face paying higher fees.

An analysis of the SJP’s updated fee structure found that new pension fund clients will soon pay more – and will continue to do so for up to 17 years.

According to SJP’s annual report published in March, chief executive Andrew Croft saw his total salary, including cash and deferred bonuses, fall from £3.6m in 2021 to £3.11m for the year past.

Former Prudential boss Mark Fitzpatrick will replace Croft as SJP chief executive next month.