David Prosser: The man from the Pru enjoys an undeservedly generous payday


Outlook Here are two numbers for you: £377m and £50,000. The first number is the cost to Prudential, as detailed in its annual report yesterday, of its failed bid for AIA, the Asian insurance company. The second figure, also taken from Pru's report, is the amount of bonus the insurer's chief executive, Tidjane Thiam, missed out on at the end of 2010. Despite presiding over the AIA botch, Mr Thiam collected a bonus of £1.57m, 97 per cent of the £1.62m that was the maximum he could have theoretically earned.

As reversals of fortunes go, this one is impressive. Last spring Mr Thiam came within a whisker of losing his job. Several shareholders called for his resignation following the AIA debacle, which saw Prudential forced to withdraw from the deal because of an investor revolt and a regulatory roadblock it hadn't noticed being built. Six months later, Pru's remuneration committee decided Mr Thiam was due all of his bonus other than – relatively speaking – some small change.

No wonder people take such a cynical view about the leaders of Britain's biggest businesses – and not just at the banks. This bonus is shameless in its reckless disregard for accountability or responsibility. In the bulging folder of stories about rewards for failure in the boardroom, Mr Thiam's pay deal will take its place close to the top.

Let us be fair and present the case for the defence. It is that aside from the AIA misadventure, Pru's performance was impressive: better-than-expected profits enabled it to raise its dividend by 20 per cent. Also, Mr Thiam has decided to take his whole bonus in shares rather than cash (normally, it would be half and half) with the award being deferred for three years. This is intended to underline Mr Thiam's commitment to the company.

Hmm. If Prudential was doing so well, even in Asia itself, why did its chief executive feel the need to bid for AIA in the first place? As for the deferred bonus, Mr Thiam will know that any company seeking to test his loyalty to Pru would be certain to offer him compensation for any payment foregone were he to jump ship. Sure, he'll have to wait a bit longer for his bonus now (and risk a share price setback) but there's no question of him not receiving the money.

Mr Thiam has not always shown the best judgement. In the run up to the AIA deal, he had to back out of an agreement that would have seen him take up a non-executive directorship at Société Générale. Shareholders understandably felt their chief executive, who had been in the job just six months at the time, had enough on his plate.

Accepting this award looks like another miscalculation. Dividend hike notwithstanding, Prudential's shareholders should say as much when they vote on the company's remuneration report at next month's AGM.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea