Legal & General chief executive slashes bonuses and slows hiring

THE new boss of Legal & General (L&G) has cut bonuses and slowed hiring in response to lower profits at its investment management business.

António Simões, who took over as chief executive in January, said he had reduced payouts at Legal & General Investment Management (LGIM) as part of cost-cutting measures.

“I took all the decisions on pay for everybody for 2023 because that’s what the chief executive does,” he said. “The reduction on [sic] the bonus for LGIM reflects the challenges on revenue and on profits.

“And that’s true for all the businesses. Variable compensation is variable for a reason – it reflects the performance of the business.”

LGIM’S profits dropped nearly 20pc last year to £274m, while revenue fell 7pc to £902m.

The company blamed high interest rates for lowering the value of its investments. Mr Simões did not say how much bonuses had been cut by. Costs at LGIM were flat at £628m. Across L&G, pre-tax profits tumbled by more than 40pc to £457m in 2023.

Mr Simões pledged to undertake a “thorough review of the business” and identify new ways to grow.

He promised to bring a “fresh per- spective”.

Mr Simões said: “I’ve been talking to shareholders and potential investors.

“A big question I’m getting is where is growth going to come from? So a lot of my focus with my team is what are the growth avenues for Legal & General going forward.”

The 48-year-old, who previously ran HSBC’S private banking arm, will outline his new strategy for Legal & General at a capital markets event in June. The update will be closely watched for signs of whether Mr Simões intends to deviate from the strategy of his predecessor, Sir Nigel Wilson, a City heavyweight who stepped down last year after more than a decade in charge.

Sir Nigel, who advised the Government on City issues alongside running L&G, pioneered a strategy of “inclusive capitalism” that aimed to benefit society as well as deliver financial returns through L&G’S investment activity. Not all of the efforts were successful: last year, L&G shut down its modular homes business, which aimed to solve the housing crisis through factory-built properties, after heavy losses.

L&G, founded in 1836, is one of the UK’S largest investment businesses with more than £1.15 trillion of assets under management. As well as managing money, it provides insurance products to the public.

Mr Simões said that L&G “demonstrated resilience in challenging markets”. Shares in the company fell 0.8pc.