the times | Wednesday April 8 2020 1GM 41
Business
The chief executive of a wealth man-
agement group has taken a £188,000
bonus cut partly because of criticisms
of the excessively lavish rewards cul-
ture at St James’s Place.
Andrew Croft’s annual bonus was cut
from £498,000 to £310,000, with the
board pay committee explaining that
this was partly due to “certain criticisms
aimed at the business”. His total pay
package for 2019 came in at £1.554 mil-
lion, down from £1.887 million after his
long-term bonus was also reduced.
St James Place, a FTSE 100 company,
is one of the biggest wealth managers in
Britain. It has almost 4,000 self-em-
ployed financial advisers, serving about
700,000 clients with between £50,000
and £5 million in non-property wealth.
It came under fire last year after an
anonymous former partner made alle-
gations in The Sunday Times accusing it
of fostering a culture of high-pressure
sales tactics with huge prizes, including
cruises, for the biggest sales.
Mr Croft, 55, responded by cancel-
ling the cruises and promised to “dialPatrick Hosking Financial Editor
St James Place boss’s bonus
is cut after rewards furore
down” the emphasis on meeting sales
targets, which were seen as not neces-
sarily in the interests of clients.
The pay committee said: “When de-
termining the bonus outcomes for 2019,
the committee considered the objec-
tives set and reflected upon key events,
including certain criticisms aimed at
the business and the decision to trans-
fer mandates from Woodford Invest-
ment Management.” Weaker financial
results were also a factor.
St James’s Place pulled £3.5 billion
from Neil Woodford’s firm in June,
shortly before the suspension of his
funds. Its clients avoided the problems
of other fundholders because their
money was in segregated mandates
that forbade him from investing in un-
listed shares.
The committee failed to make plain
whether Mr Croft was being rewarded
for withdrawing the mandate from
Woodford, or punished for having it
with the company in the first place.
Mr Croft received 37.5 per cent of his
maximum annual bonus, half in shares
and half in cash. His long-term bonus
shrank from £696,000 to £536,000.Grant Thornton
sees audit profits
slashed by 90%
equity partner for the year to June had
fallen by £20,000 to £323,000.
Grant Thornton is one of the biggest
second-tier accountants in Britain,
with about 200 partners and 4,500 em-
ployees in 27 offices. It is part of Grant
Thornton International, with offices in
about 130 countries, and traces its
British roots to 1904, when Thornton,
Webb & Co was founded.
The Financial Reporting Council put
the firm under special scrutiny last year
and called its performance “unaccept-
able” because of its sustained poor
results in an annual assessment of
Britain’s biggest audit firms. The exami-
nation scrutinised a sample of 0.6 per
cent of the firm’s audit work.
The watchdog has also opened an
investigation into Grant Thornton’s
audits of Patisserie Valerie, the cake
and café chain that fell into admin-
istration after a £40 million hole was
discovered in its accounts. It is also
investigating Grant Thornton’s audits
of Interserve, the outsourcer, and
Sports Direct, the retailer.
The results come as the professional
services sector braces for the financial
consequences of a global economic
downturn. Last week Grant Thornton
invited staff to agree to a 40 per cent
pay cut or a voluntary sabbatical to
reduce costs during the coronavirus
crisis. A spokesman said that about 150
UK employees had taken up the offer.
No staff have been furloughed.
PWC, a rival accountancy firm that
employs 22,000 people in the UK, said
that it would cut partner pay by 20 per
cent from April. Promotions and
bonuses for all staff have effectively
been frozen until the end of June after
the company delayed its performance
reviews by three months. A spokesman
said that the firm was prioritising pre-
serving jobs and paying suppliers as it
seeks to be in a strong position to
support its clients once the Covid-19
outbreak has been contained.Louisa Clarence-Smith
Delays in the pipeline Ineos has further delayed a planned shutdown of the giant Forties Pipeline System because of the
coronavirus pandemic. The petrochemicals business had planned to close the 310-mile long pipeline, which transports
about 40 per cent of UK North Sea oil and gas to shore, in June, but work on improvements will now take place in AugustALAMYAudit profits at Grant Thornton fell by
90 per cent during a difficult year in
which the accountancy firm was put
under investigation by the industry
regulator for unacceptable perform-
ance.
The mid-tier firm made a profit of
£1 million from audits in the 18 months
to January, down from £13 million in the
previous 12 months. It changed its fiscal
year from June to December and
invested £7 million in a plan to improve
audit quality last year.
David Dunckley, 46, chief executive
of the UK division, said: “We will not
shy away from the public scrutiny we,
and all of our profession, face over
historical matters that have led to
diminished trust and questions over
the quality of audits in particular.
However, we have taken actions to
deal with the underlying causes of
previous issues in our business and
have made provisions for legacy liabili-
ties while still investing to grow across
the firm.”
Audit revenues were £201 million for
the 18 months to the end of 2019, com-
pared with £140 million the previous
year. Total UK revenues of £728.4 mil-
lion were boosted by strong growth in
the advisory business. Pre-tax profit for
the same period was £72.4 million,
against £479.5 million of revenue and
£67.6 million pre-tax profit in the
previous 12 months.
The average profit share per partner
was £513,000 over the 18-month period.
An interim report published in October
showed that the average profit per
90%
Fall in profits at Grant Thornton
Grant Thornton