Aviva faces wrath on pay as investors flex muscles

Click to follow

Aviva yesterday became only the fourth FTSE 100 company to have its remuneration report thrown out by shareholders as the City's spring of discontent claimed its first blue-chip scalp.

Nearly 60 per cent of the insurance giant's shareholders refused to back the bumper pay packages it has awarded its executives, despite the fact that its shares have been falling of a cliff.

On a red-letter day for shareholder activism, nearly 40 per cent of shareholders also failed to back Inmarsat's remuneration report, while more than 26 per cent of Premier Foods' investors issued a similar rebuke to its bosses.

However, the Aviva vote was the most significant and came despite a bid to buy off furious investors earlier in the week when chief executive Andrew Moss said he would forgo this year's pay rise.

It is particularly important because Aviva is itself a big institutional shareholder and marks the first time that the City has taken such a pot-shot at one of its own.

Much of the anger at yesterday's shareholder meeting was aimed at Mr Moss, who was paid £3m last year and has been under fire as a result of the group's stuttering performance.

There has been a run of rebellions in recent weeks. Last Friday, 26.9 per cent of Barclays shareholders rejected the £17.7m pay package of chief executive Bob Diamond.

In 2003, 51 per cent of shareholders in GlaxoSmithKline voted against the pay of the then-boss JP Garnier, while 59.42 per cent voted against Shell chief executive Peter Voser's pay in 2009.

A spokesman for the corporate governance consultancy, Pirc, which advises some of Britain's biggest pension funds, said: "[Aviva] now needs to make good on its commitment to talk to shareholders, find out what has gone wrong and put it right.

"We have felt since the financial crisis hit that there was going to be a need for shareholders to improve their oversight. We are now finally seeing institutions standing up and taking ownership responsibilities seriously."