Briefing
What you should
know about the
company threatening
to quit Scotland
Kenneth Roy

Crawford Gillies

I
Any investors who are unhappy about Standard Life's decision to intervene in what passes for the independence debate will have an opportunity to voice their displeasure at the annual general meeting of the company in Edinburgh on 13 May. But I doubt that chief executive David Nish will be losing any sleep over the prospect. We are not looking at a shareholder revolt. It's the dividend, stupid.

Nevertheless, it would be wrong to suppose that all 11 members of the board warmly endorsed the warning in the annual report that Standard Life might move south in the event of a Yes vote. According to Iain Martin, a journalist who is often reliable in such matters, the decision to launch a limited nuclear attack on the Scottish National Party was taken only after a discussion lively by Edinburgh standards. In Glasgow, they would have called it a stairheid rammy.

Surprise surprise, no-one broke ranks; the chairman, Gerry Grimstone, got his way. Mr Grimstone – a name that might have been plucked from a Dickensian counting house some snowy Christmas Eve – has emerged from the recent media exposure more or less untouched. Despite the self-inflicted calamities of the last six years, corporate Scotland still enjoys a favourable – sometimes even awe-struck – press.

Yet it is unnecessary to excavate the depths of Standard Life's annual report to unearth a rather extraordinary state of affairs. A little light digging will do.

II
The first shock is that the 18 members of the wretched board of RBS who presided over the bank's collapse in the autumn of 2008, with consequences for the rest of us, have not all been banished from the stewardship of our great financial institutions, what's left of them.

The former merchant banker Colin M Buchan, who was first appointed to the RBS board in 2002 and reappointed in the spring of 2008, six months before the crash, continued well beyond it, serving on the committee which was in charge of approving Fred Goodwin's notorious leaving package. Mr Buchan was then promoted to an important new role.

I wrote in October 2009: 'Since it was the remuneration committee which approved Sir Fred's pension arrangements, there might be a public expectation that the chairman of the commitee should be someone unconnected with the bank's downfall: a fresh face with no baggage. Wrong. The new chairman of the remuneration committee is none other than Colin M Buchan.'

With such a warm testimonial from the Scottish Review, it was inevitable that Mr Buchan would enjoy a glittering future. Sure enough, he went on picking up his handsome non-exec fees until he finally left the RBS group in the summer of 2011. But he remained a weel-kent figure in Edinburgh financial circles. In the very year of the RBS disaster, Mr Buchan had been doubly blessed, joining the board of – I expect you've guessed – Standard Life. There he became an ornament of both the audit and remuneration committees.

Generous chap that he is, Mr Buchan not only approved the golden goodbye to the man we no longer call Sir Fred; in more recent, more straitened times he has helped to sign off the bonus payments to ex-Paisley Grammar School boy, David Nish.

In 2011 Mr Nish's remuneration from Standard Life totalled £2.6m. The following year it leapt to £5.6m. Last year it fell to £4.1m, a noble sacrificial gesture at a time when the banks under the greatest pressure are food ones. A little simple arithmetic – even bankers should be able to manage it – tells us that the chief executive has received £12.3m from his company in the last three years. This colossal figure prompts the not entirely original thought that, from the wreckage of Edinburgh as a financial centre, few if any lessons of value have been learned.

III
Mr Buchan is retiring at the annual general meeting. But it seems that a more high-profile figure, the chairman of the remuneration committee, will be soldiering on – picking up any passing flak for the ludicrous payments to the chief executive.

Yet the flak is limited. Not a hint of ridicule was heaped on the chairman of the remuneration committee when he claimed last year that bonuses totalling almost £10m to Mr Nish and two of his executive colleagues were justified on the grounds that they were 'in line with the range of increases accorded to the group's wider workforce'.

There is little evidence that the wider workforce is a contented one. When Standard Life abandoned its mutual ethos in favour of a harsher plc structure some years ago, the wider workforce reacted badly to changes in the staff pension scheme; now the company's 5,000 employees in Edinburgh face a period of insecurity about Standard Life's long-term intentions. But at least the workers can rest assured that Mr Nish only got what he got because they were getting it too – it wouldn't have been fair if the chief executive had been left out.

The person responsible for the periodic defences of fatcat bonuses at Standard Life is far from being an anonymous character in the style of Colin M Buchan. The chairman of the remuneration committee is none other than Crawford Gillies, who also happens to be chairman of the national economic development agency, Scottish Enterprise.

When Mr Gillies was appointed to this key role in Scottish public life in 2009, he was personally introduced by the cabinet secretary for finance, John Swinney. 'There is a sense,' purred the Scotsman, 'that the business community is rather pleased to see one of their own, with real business experience, at the helm'. The Scotsman, too, seemed pleased. John Swinney seemed pleased. Everybody who was anybody seemed pleased.

Mr Gillies himself said at the time that, although the SNP's economic policy was 'ambitious', he wholly supported it. Perhaps he continues to support it. Holding the office he does, it would be strange if he did not. But it is more than a little ironical that the man at the head of Scottish Enterprise, the man who is spearheading the economic development of Scotland, is the same man who has subscribed to a statement warning that Standard Life's continued presence in Scotland can no longer be taken for granted.

How can Mr Gillies, wearing one hat, represent and champion the economic policies of the Scottish Government and, wearing another, be part of a company which is holding a gun to the Scottish Government's head? Sometimes in life, even Standard Life, you have to choose. Maybe it's time he did.

Kenneth Roy is editor of the Scottish Review