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.

PROMOTED VIDEO
Extras
indybest
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Senior Application Support -Fidessa, Charles River, Oracle, FIX

£50000 - £65000 per annum: Harrington Starr: Senior Application Support - Fide...

Product Specialist - (Application Support, UNIX, SQL)

£45000 - £60000 per annum: Harrington Starr: Product Specialist - (Application...

Technical Specialist - (Application Support, UNIX, SQL)

£50000 - £60000 per annum: Harrington Starr: Technical Specialist - (Applicati...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home