Professional carpetbagger, David Stonebanks and co, yesterday attended the Standard Life AGM. The meeting will no doubt have been eventful following Standards announcement a few days ago to demutualise - but to delay it for a few years!
In a note to , Mr Stonebanks advised that the board had been questioned on whether those people who had policies maturing before the proposed conversion date would benefit and he seemed non-impressed stating that: "The Finance Director John Hylands was asked to reply and consistently he said that members "would be treated fairly" while ignoring or failing to understand the question".
Mr Stonebanks said that he: "made a plea on behalf of WP bond-holders. These are the lowest of the low in StdLife's WP fund. They have no GARs (guaranteed annuity rates), GIRs (guaranteed interest rates), or 'mortgage promises', and they have no maturity date where an investor can expect a penalty-free exit, yet the returns for bond-investors are reduced by the costs of all of these preferential terms for other policyholders. "He also suggested that "all, or most of, any proceeds from demutualisation should be put into the WP fund. This would solve many of the Company's shortfall, guarantee, and mortgage-promise problems and would be the most equitable outcome for all members."
Our view
Mr Stonebanks indeed has many valid points which, we have to say, we agree with. It is also quite sickening the level of senior employee "fat cat" pay reviews compared to the current level of bonus rates for the people that actually own the business i.e. the members.
We believe that the Board still does not wish to demutualise as they will then have to answer to some quite "big gun" shareholders such as pension funds who will not tolerate poor management. Was this move to demutualise purely to appease the Financial Services Authority, who have been breathing down Standards neck regarding financial strength for sometime? Surely not.
Time will tell whether they do actually demutualise.