The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Thursday, June 29, 2006

A Nice Little Earner

A Nice Little Earner

Those of you who were worried that the poor old executives of Standard Life might not do so well out of their forthcoming share listing, need not worry.

As already reported on this site, the share listing has been badly affected by the downturn in the stock market; it meant that Standard Life are having to offer their shares at a lower than expected price.

Needless to say, this negatively impacts policyholders who are to receive an allocation of shares; their share allocation is now lower in value than they had been expecting.

It should be remembered that it is not only policyholders who receive shares, but the board of Standard Life as well. Therefore they too will receive a lower valuation of their allocation.

Now as with many things in life, not everything is as clear cut as it first may seem. You see, some of the board have a nice agreement whereby if the share price is lower than first expected they get allocated more shares.

Standard Life's top five executives will be awarded more shares if the issue is priced cheaply.

It seems that the agreement has put management's interests alongside the institutions, which will be pressing for a low issue price, rather than retail investors that want to sell their shares immediately to get their windfalls.

Sandy Crombie, the chief executive, was awarded a maximum incentive of £1.13M. He is the man who opposed the demutualisation of Standard Life in 2000, when policyholders could have earned 10 times as much as they are now had the deal gone ahead.

Funny old world isn't it?

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