High finance

At the end of 2001 I switched my Standard Life pension policy out of the with-profits fund into the cash fund as I was convinced that the bonus element of my investment was at risk in the stock market bubble that the central banking system had created. This turned out to be an excellent decision as the bonuses have been cut five times since then.

Standard Life's own management haven't been doing too badly over that period:

Standard Life revealed last Friday that its former chief executive, Iain Lumsden, received a pay package, excluding pension contributions, worth about £1m in 2003. His final-year remuneration rose 12 per cent from 2002, and included a performance-related bonus of £125,000.

Now I recognise that these payments are justified by contractual arrangements made previously, but are they wise? I think not, and now Standard Life has decided to allow policyholders to have a vote on directors' remuneration.

However:

Crucially, the vote will not be binding, but it will provide a closely-watched insight into how Standard Life investors feel the management of the group is performing.

What will happen if the members vote against the rises, as I certainly would were I still eligible to vote? Business leaders must be seen to be acting fairly if capitalism is to survive. Mr Lumsden and his former colleagues should share some of the losses suffered by Standard Life's investors.