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Trade minister in line for £4m share payout from bank
Hugo Duncan14 Apr 2009
TRADE minister Lord Davies is on course to get more than £4million of shares from UK bank Standard Chartered, it emerged today.
Mervyn Davies, who stood down as chairman of Standard Chartered in January after Gordon Brown appointed him trade minister, is eligible for 426,000 shares worth £4.2million.
The bumper payout could cause fresh embarrassment for the Government amid the ongoing row over City bonuses and the £700,000-a-year pension paid to former Royal Bank of Scotland chief executive Sir Fred Goodwin.
However, the share awards to Lord Davies will only be paid if the bank hits certain performance targets in the coming months. He has also placed the potential awards in a blind trust to avoid a conflict of interest while he is a Government minister.
Lord Davies became chairman of Standard Chartered in 2006 after five years as chief executive and has been credited with running one of the UK's strongest banks. It has not any received any Government support.
The bank's annual report says Lord Davies has "entered into a personal arrangement with an independent trustee under which he has agreed that such awards can not be exercised without the written authority of such trustee for the duration of any appointment that he might have in the Government". Standard Chartered shares opened trading at 986p today, valuing his share holding at £4.2million.
Lord Davies, 56, was paid £650,000 last year as the bank's chairman but received no pay-off when he left and has taken a reduced pension of £117,000. He is working for free as a trade minister.
A spokesman for the Department for Business Enterprise and Regulatory Reform said the blind trust meant "Lord Davies has no control over shares and has no knowledge of what happens to them".
He added: "Lord Davies made a full disclosure of his interest to the Cabinet Office and BERR permanent secretary Brian Bender and, having consulted with them, Lord Davies is confident there is no conflict of interest."
The Standard Chartered annual report also showed that chief executive Peter Sands was paid £4million last year.
Finance director Richard Meddings got £2.7million. But they were not the highest-paid bankers at Standard Chartered. Karam Butalia, the global head of private equity, pocketed £16million when he left the bank last year.
Standard Chartered is the world's leading emerging markets bank and plays a vital role in financing global trade.
Lord Davies was largely unknown in London when he returned from Hong Kong to take the helm in 2001 but quickly became one of Mr Brown's most trusted business advisers.
He has years of banking experience, an extensive international contacts book and a record of supporting Government initiatives, so his elevation to the House of Lords did not come as a surprise.
However, he has previously criticised large payouts to bankers and in December said: "We need to make sure that compensation doesn't lose touch with the rest of society. When you hear people were getting tens of millions for short-term bonus awards, it seems to be out of touch with the returns and the risk."
Reader views (5)
Blind Trust - Untrue. If you put known shares into a trust and know that they are to be held then it is not blind. Once again Ministers have a very convenient definition that makes no sense in the real world. How in the name of all that is true can a minister claim independence from a known investment.
- Billbo9, Slough, 05/05/2009 15:55
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1/. The Bank has not received public money;
2/. He received no pay-off when he left;
3/. He has taken a reduced pension;
4/. He is working for free as a trade minister.
Where is the problem here? This is a non-issue.
- Frank, Home Counties, England., 14/04/2009 14:36
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Nothing changes.
Money talks.
I often wondered why Lords and MP's all have the gift of the gab.
- Reuben Camara, Morecambe/Lancaster, 14/04/2009 11:18
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What's the problem here?
Standard Chartered is a private bank, it didn't get any government bailouts. It's one of a few banks who has been prudent with its investments and not had its balance sheet tainted with toxic assets.
All of this was done under his stewardship when he was the Guv!
Anyone who thinks he doesn't deserve his payout is deluded.
- Decency, London, UK, 14/04/2009 11:12
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So what is new with Lords and Bankers?
- Mickyinlondon, london, 14/04/2009 10:41
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