Old Mutual faces shareholder rebellion over ‘unusual’ £9m pay deal

Old Mutual Wealth 2014

Some of the biggest shareholders in Old Mutual are considering voting against a proposed pay deal for the Old Mutual chief executive which would see him paid 1,000 per cent of base salary.

The Financial Times reports Bruce Hemphill’ base salary is proposed at £900,000, making the maximum payout £9m under a long-term incentive plan linked to the break-up of the Old Mutual group.

Old Mutual announced in March it plans to split its business into four as part of what it is calling a “managed separation”.

The plan is to carve up the business, separating out Old Mutual Wealth, South African lender Nedbank, the South African Old Mutual Emerging Markets business and its US institutional asset management arm OM Asset Management.

Hemphill’s payout is based on performance targets once the business has been split out or in March 2020, whichever comes first.

One top 20 shareholder told the newspaper: “The pay framework proposed is unusual and large. A figure of 1,000 per cent of base salary is very generous, particularly if the company is split up earlier than the 2018 deadline.”

Another top 20 investor said: “We need to look closely at the performance targets as the maximum payout is a lot. However, breaking up a company is a complicated thing to do and the chief executive is out of a job at the end of it.”

The vote on the proposed pay package is on 28 June.