- St James’s Place said reducing incentive plan risked damaging its ‘credibility’
- St James’s Place bounced back on Wednesday, but have fallen 40% this year
St James’s Place has defended its decision not to cut share awards for top staff last year after a mini investor revolt over its remuneration policy.
Britain’s biggest wealth manager calculated share awards at the height of pandemic that became due to bosses last year, but some investors argue a fall in the group’s share price at the time of the grant should mean the payout was lower.
Over 20 per cent of the firm’s shareholders voted against its proposed director remuneration report at its annual general meeting in May.
But SJP, which has suffered a heavy share price slump this year, told investors on Wednesday that reducing the firm’s long-term incentive plan ‘risked damaging the credibility of it’.
New boss: Mark Fitzpatrick will become the chief executive of St James’s Place in December
SJP shares rose 7.18 per cent or 47.40p to 708.00p on Wednesday, having fallen by 40 per cent in the last year.
In Wednesday’s update, the wealth management group noted that certain shareholders had concerns over the vesting outcome on the 2020 Performance Share Plan grant.
It said: ‘This minority of shareholders said that they felt that the committee should have applied a discretionary downward adjustment to the performance-based vesting outcome to take account of the fall in share price at the time of grant in 2020 and the effect of this on the number of shares granted.
‘Also, they felt that the explanation provided in the remuneration report could have been enhanced to assist shareholders’ assessment of the vesting outcome decided by the committee.’
SJP shares fell roughly 3 per cent in 2020, recovering from a lockdown price plunge of around 40 per cent.
In response to these concerns, SJP, said: ‘Applying a reduction to the vesting outcome in addition to the restraint already referred to above, risked damaging the credibility of the PSP also bearing in mind that no reciprocal upward adjustment could have been made in a previous year when the share price had “spiked” at the time of grant resulting in a reduced number of shares being awarded.’
SJP shares were up more than 20 per cent in 2019.
The SJP remuneration committee said it believed it had acted in the ‘best interests’ of the group and stakeholders in not applying a downward adjustment to the performance-based vesting outcome.
The group claimed it was ‘grateful’ for the feedback from investors and said it would keep shareholders’ views on the issue ‘in mind’ in future.
It added: ‘The Board will continue to engage with shareholders and their representative bodies in line with our normal practice and will reflect their feedback, as appropriate in the 2023 Directors’ Remuneration Report.’
SJP’s share price has slumped over 40 per cent in the year to date.
It was forced to scrap its controversial exit fees for new bond and pension investments last month in a revamp of its charging structure after facing scrutiny from regulators.
SJP has long faced accusations of excessive fees to customers for financial advice and early withdrawals.
The shake-up will see the ‘vast majority’ of new pensions and bond investment charge initial and ongoing fees, but with no early withdrawal charges or gestation period.
Reports of the move caused a sell-off in SJP shares as investors fretted the potential impact on the group’s bottom line.
However, it emerged this week that new pension fund clients of SJP may still face paying higher fees.
An analysis of SJP’s updated fee structure has found that new pension fund customers 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 pay including cash and deferred bonuses slip from £3.6million in 2021 to £3.11million last year.
Former Prudential boss Mark Fitzpatrick is taking over from Croft as chief executive of SJP next month.