CDC to overhaul remuneration scheme

The state-backed development group will have to strike a new balance between attracting top-tier talent and keeping pay in line with its mandate as an investor in impoverished regions.

Following a government review of its business plan CDC group will craft firm-wide pay guidelines for its employees. 

The goal will be to attract successful fund managers with emerging market credentials who will preserve the group’s development mission, the group said in a statement.

Final details of the group’s compensation scheme will be ironed out when a new chief executive is identified, said a CDC spokesperson. The group’s current head, Richard Laing, is expected to step down before the end of this year.

There is a high value in being a part of a group dedicated to alleviating poverty in capital starved markets

CDC Group

Ultimately, the policy will “be appropriate for a publicly-owned body whose purpose is poverty reduction,” said the development finance institution, which is owned by the UK government’s Department for International Development.

In recent years, the group has faced criticism from some quarters for its remuneration structure of top executives, alleged lavish expense claims, and for supposedly not directing enough capital to emerging markets most in need of investment.

In devising its policy CDC will follow guidance from UK and European Union regulators so that managers’ pay is “largely deferred and based on long-term performance”, said the statement. This does not mean, however, that shorter-term bonuses were impermissible, said the spokesperson.

A reordering of the group’s remuneration scheme will not put CDC at a competitive disadvantage with its purely private peers, added the spokesperson. “There is a high value in being a part of a group dedicated to alleviating poverty in capital starved markets.”

The changes come under a wider firm shake-up following a government probe into whether the group was doing enough to combat poverty.

CDC will now concentrate its investments exclusively in sub-Saharan Africa and South Asia where 70 percent of the world’s poor live, said the statement. Other changes include a recommitment to environment, social and governance (ESG) standards, greater transparency, the inclusion of direct and debt investments in its portfolio and an updated investment code. 

The group will remain a publicly-owned company operating at arm’s length from government, regulated by UK authorities and with its own board.