David Nish, Standard Life's finance director, was today named as the new chief executive to succeed Sir Sandy Crombie, with a pay and bonus package of up to £3.3 million.

Mr Nish will be paid £700,000 a year, lower than Sir Sandy's £745,000 basic salary last year, as well as cash and share bonuses worth up to a maximum of £2.625 million in his new role, which he will assume on January 1, 2010.

Sir Sandy will stand down on December 31 this year but will remain with the business until April 2010 to "ensure a smooth transition".

In recent years the financial services company’s top executives have not managed to earn their potential maximum bonuses.

Last year, the two executives saw their bonuses slashed after they failed to meet a key profitability target.

Sir Sandy's total pay and bonus dropped from £1.64 million to £1.39 million last year. Mr Nish saw his total compensation drop from £945,000 to £885,000.

Mr Nish, who joined Standard Life in 2006, has long been considered the front-runner to replace Sir Sandy.

Gerry Grimstone, Standard Life's chairman told The Times that he had interviewed executives from companies in France, Australia, the US and the UK as potential external replacements for Sir Sandy.

He said the insurer began the search in earnest in April, using Egon Zehnder, the headhunter.

"The job specification was that we wanted someone who was knowledgeable about financial services who had touched on insurance through their career," Mr Grimstone said.

"We started off with a potential list of 20 to 30 people, boiled it down to about a dozen and then ended up with a good half dozen serious contenders," he said.

He said that Standard Life felt that it had to be exhaustive in its external hunt because Mr Nish, and others, were hotly tipped as suitable insiders.

The other internal contender for the post was Keith Skeoch, who runs Standard Life Investments. Mr Grimstone said he expected Mr Skeoch to remain at Standard Life, despite losing out to his rival.

He said that he wasn't expecting Mr Nish to push through any "abrupt changes in strategy" at Standard Life, although he acknowledged that he was bound to want to impose his mark as the new boss.

Sir Sandy, who turned 60 in February, announced his plan to step down this March after five years at the helm, and having steered the Edinburgh group through its demutualisation and flotation three years ago.

Sir Sandy joined Standard Life from school, set up Standard Life Investments, its fund management division, and is in his 42nd year as an employee of the company.

He was knighted in the New Year’s Honours List.

Mr Grimstone paid tribute to Sir Sandy, admitting that "there wouldn't be a Standard Life today if it hadn't been for what Sandy did".

Mr Nish began his career at ScottishPower as deputy finance director, before becoming finance director in 1999.

He had been seen as the main contender to succeed Ian Russell as chief executive at ScottishPower, but was ousted as part of a management shake up as the company fended off a bid from German rival E.ON in 2005 before Mr Russell himself was ousted.

Mr Nish has been focusing on improving Standard Life's balance sheet and is thought to be lining up a sale of Standard Life Bank to Barclays.

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