Chairman reveals executive coup was begun six months ago
Standard Life began planning to replace David Nish as chief executive more than six months ago and approached his right-hand man Keith Skeoch in February to take the job, the group's chairman has said after revealing the City's best-kept secret.
Mr Nish, 55, who joined as finance director in 2006 and took the helm in 2010,
will leave Standard Life on August 5 and Mr Skeoch, 59, who left the City for Edinburgh 16 years ago, will take over, with a company source saying their ages were "not relevant".
Chairman Sir Gerry Grimstone said Mr Skeoch's Standard Life Investments now accounted for more than half of group profits, it was driving the internationalisation of the business, and the move would help bring the "two cultures" of the organisation together.
Mr Nish will not depart the scene until September 30 and will then receive six months 'garden leave' pay worth £417,500 plus all benefits. He will still be paid in lieu of notice until June 30, but receive no 'golden goodbye' pay-off. Last year he received £5.5m, including £3m in long-term shares, and will be eligible for the full pay-out from Standard's 2013-16 incentive plan.
Mr Skeoch, who picked up £5.2m, has always run Mr Nish's close and in 2009 was the highest-paid director, and he will now see his salary rise from £500,000 to £700,000.
Sir Gerry, the group's nine-year chairman, said top 10 shareholders had been told on Thursday, the day after Mr Skeoch's appointment had been given the green light by the regulator. "Everybody was surprised, because we had kept it secret, as soon as they started thinking about it everybody said this was a completely natural development of our strategy for the future."
The chairman said: "We started thinking about this towards the end of last year, it was a natural consequence of the sale of Canada and the purchase of Ignis. We have been progressively changing the shape of Standard Life and that is very much what David has been doing. Once that had been largely done, it was time to sit down and think about management shape and executive shape in the future."
He went on: "We had very straightforward and very amicable conversations that led to us really analysing deeply what kind of person we wanted to run Standard Life in its new form as a business with investment at its centre. We analysed the characteristics and thought about it, I first approached Keith in about February and he was very excited about the possibility."
A decade ago Mr Nish lost his job as finance director at ScottishPower in an overnight boardroom cull.
But Sir Gerry said: "This was not something that was done in secret meetings with Keith and we suddenly told David, it was a very open process."
The chairman said former chief Sir Sandy Crombie had been "absolutely the right man" for the era of demutualisation, but Mr Nish had inherited "an incredibly complicated muddled business". He went on: "We saw in David a man who had fantastic skills in transforming a business." Standard Life's core business now however was about investment performance, creating products, and distributing them at home through the life company and overseas. "What differentiates people in this low interest rate era is investment content".
Mr Nish said: "One of the most important responsibilities of a chief executive is recognising both the right time to pass the baton and also to help ensure it is passed on to the right person. Now is the right time for both the group and myself."
Mr Skeoch said: "I am delighted to have the opportunity to lead Standard Life. Standard Life has been both transformed and simplified in recent years. This has put the fundamentals in place to build a world class business with investment management at its heart."
Clive Beagles, fund manager of the JOHCM UK Equity Income Fund, the fourth-biggest investor in Standard Life by fund, said:
"It's a fairly obvious move. The business is increasingly focusing on the world of savings and investments, but it's sad to see David move on as we think he's done a very good job. He's been one of the best-executing chief executives in our fund."
Barrie Cornes, analyst at Panmure Gordon, said Skeoch was "a safe pair of hands" who would stick with the existing strategy.
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