Policyholders lost 15% on payouts, chief executive gained 25% pay rise

At a time when it was cutting payouts to pension and endowment mortgage holders by an average of 15%, Iain Lumsden, the chief executive, received a 25% pay rise to £619,000 and a long-term bonus.

The pay awards to Mr Lumsden and the other board directors of Standard Life led to protests at the 178-year-old insurers' annual meeting last year.

Like many other Standard Life employees, Mr Lumsden, who took over from Scott Bell in 2002, has worked for the mutual for his entire career. Born in Scotland but brought up in Liverpool, he joined Standard Life in the mid-60s and steadily worked himself into the top job.

According to the last annual report for Standard Life, his predecessor retired with a £844,000 bonus and a pension of £410,000 a year. Sandy Crombie, the deputy chief executive who runs the fund management arm, was paid £520,000, up from £433,000. Standard Life lost £4.5bn on its investments last year. Finance director John Hylands took home £176,000.

John Trott, the outgoing chairman, was forced to defend the mutual insurer against accusations of "complacency and arrogance" over bonuses for senior executives at the rowdy annual meeting. He told the assembled policyholders: "We believe as a matter of principle we should pay bonuses for success and not mediocrity."

There is also controversy about directors' pensions. Mr Lumsden's annual pension entitlement has risen from £208,000 to £301,000, equivalent to an extra £1.5m in his annuity package.