Shareholders take stand on pay at Aberdeen Asset Management

Fund firm faces up to significant “no vote” on pay

Shareholders have warned Aberdeen Asset Management about rising executive pay, with almost 30% of votes at the fund firm’s annual general meeting rejecting its 2010 remuneration report.

There were 243.8m votes against the report, representing 29.21% of shares, an unusually large amount.

The year saw the combined salary and bonus of Aberdeen’s Chief Executive Martin Gilbert surge to £3.8m, with substantial increases as well for Deputy CEO Andrew Laing and Finance Director Bill Rattray.

The company pointed to a 147% increase in pre-tax profits – and that it takes advice from PricewaterhouseCoopers LLP on remuneration.

There was little forewarning that any sort of shareholder rejection of the report was in the offing. It is not known the degree to which shareholders worked together – perhaps in the spirit of the Stewardship Code – to coordinate on the vote.

An Aberdeen spokesman said: “The vote on the report was carried by a very substantial majority of shareholders, who recognise that the group needs to retain its world class talent by running an effectiveremuneration policy. We will continue a dialogue with our shareholders on this important issue.”

Many of the company’s shareholders may also be clients. For example, Norges Bank, the manager of the Norwegian Government Pension Fund, has a stake of just under 3% in the firm and employs it to run an equity mandate.

The pay policy “will remain unchanged for 2011 and subsequent years,” Aberdeen stated in its 2010 annual report, adding that its policy is to pay salaries which are market competitive in the asset management sector. Following a review, the remuneration committee – chaired by former Conservative Foreign Secretary Sir Malcolm Rifkind – found the current salaries “no longer reflected market rates, having not been materially increased for a number of years”.

The company, a signatory to the United Nations Principles for Responsible Investment, said this week that assets under management increased by 2.6% to £183.3bn (€216.4bn) with £12.3bn of new business won in the quarter to the end of December.
Aberdeen’s AGM report