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Fund giants hand out £35m ‎merger bonuses

Business & Economy 01 May 2017
Fund giants hand out £35m ‎merger bonuses

Aberdeen and Standard Life pay £35m to prevent stars quitting

Aberdeen and Standard Life will pay big sums to prevent star fund managers quitting during their merger, Sky News learns.

Image: Standard Life said it has a 'strong team-based ethos'

By Mark Kleinman, City Editor

Two Scottish fund management giants plotting a near-£11bn merger are to hand tens of millions of pounds in retention bonuses to star executives to prevent them quitting during the deal.

Sky News has learnt that ‎Aberdeen Asset Management and Standard Life have agreed to pay roughly £35m to a cluster of executives who manage huge amounts of client money.

The retention bonuses – which are understood to be payable to fund managers who remain with the combined group for at least three years – form part of a one-off £320m integration cost alluded to in the companies' merger announcement in March.

Such payments are not uncommon in corporate mergers where the retention of key staff is critical to the success of a deal.

Henderson Global Investors‎ and US rival Janus have agreed to pay retention bonuses to some staff as they prepare to merge.

The merger of Aberdeen and Standard Life will create Europe's second-largest fund manager, with an estimated £660bn under management.

Standard Life Investments' high-profile head of equities, ‎David Cumming, resigned less than a week after the tie-up with Aberdeen was announced, raising concerns among shareholders about the loss of key personnel.

The merger will result in the comparatively unusual arrangement of the as yet unnamed company having co-chief executives.

Martin Gilbert of Aberdeen and Standard Life's Keith Skeoch will have clearly defined areas of responsibility, although some investors are sceptical that the arrangement will work beyond the short term.

Aberdeen now has a market value of just under £3.7bn, while Standard Life is worth £7.2bn, with shares in both companies having fallen since they confirmed a Sky News report that they were in merger talks.

A Standard Life spokesman ‎declined to confirm the size of the retention bonuses being offered to star fund managers.

He said: "At Standard Life Investments we have a strong team-based ethos, and this is underpinned by remuneration arrangements which are structured to reward performance over the long term and encourage retention of our talent.

"We have specific plans in place to engage and retain our talent through the merger process."

Aberdeen could not be reached for comment.

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