Santander’s UK boss will have his pension allowance cut by £436,000 over the next two years, as the lender becomes the latest bank to bow to pressure from investors over bumper retirement benefits.
Chief executive Nathan Bostock’s pay in lieu of pension is worth 35% of his £1.7m base salary, far above the 9% offered to the rest of staff. But the Spanish lender will cut Bostock’s lump sum to about 22% of salary next year before bringing it in line with the staff allowance in 2021.
This will bring his pay in lieu of pension down to £218,000, based on his 2018 salary levels. Santander UK is not expected to increase other parts of Bostock’s pay package to offset the loss. He was paid a total of £4.6m in 2018.
The £436,000 reduction is expected to be the largest retirement benefit cut among the UK’s five largest banks.
The Investment Association has been urging companies to bring executive pension pay below 25% of salary, and has set a rigorous two-year deadline to align with the rest of the workforce. Santander’s capitulation, first reported by the Financial Times, means all five of the UK’s largest banks are on track to fall in line with the new rules, after facing threats of shareholder rebellions.
HSBC was one of the first to take action, shaving about £250,000 off the pay of the ex-chief executive, John Flint, in the spring by reducing his pension pay from 30% to 10% of salary. Royal Bank of Scotland also set the pension pay of its new chief executive, Alison Rose, at 10% of salary, or about £110,000.
Standard Chartered finally bowed to investor pressure over boss Bill Winter’s 40% pension pay last month, announcing plans to halve his allowance from £474,000 to £237,000 following a shareholder revolt at its AGM in May.
Barclays is also expected to halve its boss Jes Staley’s £396,000 pension payments, while Lloyds Banking Group is proposing to cut the allowance of its chief executive, António Horta-Osório, by about £220,000 to about £190,000.
A Santander spokesman said: “We are supportive of the Investment Association guidelines around aligning executive pensions with the wider workforce. Our remuneration arrangements will be reported in the usual way in our annual report, published early next year.”
