Querying the Bill

StanChart reinforces case for simpler pay

Standard Chartered gave new Chief Executive Bill Winters shares worth almost pound 6 million to buy him out of hedge fund Renshaw Bay last year. Yet, that amount is hard to square with the now-known price at which the fund's main business was sold subsequently. There may be an explanation, but it's a reminder that executive pay is better when it's simpler.

Winters' signing-on fee for the UK-headquartered bank included 899,031 shares to buy him out of his stake in Renshaw Bay, a hedge fund he started up. Those shares were worth £5.8 million when the payout was disclosed on September 23. The price was set by Standard Chartered's remuneration committee.

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In October, the property debt finance arm of Renshaw Bay was sold to Swiss firm GAM Holding. It this week disclosed the price: 15.7 million Swiss francs (£10.5 million at the then-exchange rate), of which 11 million francs were paid upfront. In sterling terms, Winters' stake, around 30 per cent according to a person familiar with the situation, would have been worth about £3.2 million, quite a lot less.

Those numbers don't capture the full value of Renshaw Bay. It had some other assets, one other investment mandate, and about £7 million in cash at the end of 2014. StanChart is confident that the bonus is worth substantially less than the value of interests Winters forfeited at the time.

That may be. Shareholders will have to take that on trust, though, unless StanChart is prepared to show its working. Executive buyouts can be overly complex and should be avoided. At least Standard Chartered paid Winters for his Renshaw Bay stake in stock rather than cash: the shares now are worth just £4.3 million.