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Standard Life Chair Warns of Threat from Greedy Bosses

The chairman of Standard Life Aberdeen has warned that reckless pay policies jeopardize the economy.

  • Joe McGrath

Greedy bosses pocketing excessive pay and excluding wider society in business decisions will damage economic prosperity when the U.K. leaves the European Union, according to an asset management executive.

Sir Gerry Grimstone, chairman of Standard Life Aberdeen, is set to discuss the issue with politicians Margot James and Jonathan Djanogly at a fringe event to the Conservative Party’s conference in Manchester on Monday.

The Financial Reporting Council is also beginning consultations with businesses and investors about changes to the U.K. Corporate Governance Code after government recommendations in August. The government paper made a series of recommendations including the suggestion that companies to report a chief executive to wider workforce pay ratio.

In a statement ahead of Monday’s event, Grimstone singled out banks and the collapse of British retailer BHS as examples that had “undermined public trust and confidence in big business.” He said the newly merged Standard Life Aberdeen would be using its “even bigger voice” to urge strong corporate governance values. Grimstone’s promise comes as asset managers globally become increasingly involved in the affairs of the businesses in which they invest. BlackRock, Vanguard, State Street, Hermes, Aviva Investors, and Schroders have all been in the headlines over the past 12 months for expressing their views of company policies at annual general meetings.

Last week, 12 U.K. consultants released a joint statement pledging to steer pension investors to give greater consideration to governance and sustainability in their investment decisions.

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Corporate stewardship and governance are hot topics for investors beyond the U.K., with the European Union scheduled to bring in a shareholder rights directive over the next two years.

“It is vital to our economic prosperity, particularly in the wake of Brexit, to restore trust,” Grimstone said in a statement ahead of Monday’s event. “As one of the largest financial services firms in Europe following our recent merger, it is a responsibility we feel particularly keenly,” he continued. “Firms must lead the way by operating and behaving in line with the values expected by stakeholders, including wider society. Institutional investors and shareholders more widely also have a critical part to play.”