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Business Comment

Simon English: Why RSA's chief could have a rebellious time

Outlook Just how much trouble is Simon Lee of RSA in? Perhaps the answer is this: more than he seems to realise. The boss of the insurer with the fake Morgan Freeman adverts has been under the cosh ever since he shocked the market, and his own shareholders, by slashing the dividend by a third.

The shares tanked that day, which tells you that RSA made a complete hash of managing the situation. Hacking the dividend in the first place is bad; it coming as a complete surprise is even worse.

Yesterday RSA had some sales figures to report: they were ok. The much bigger issue is the lingering anger felt by the City towards the business, and by extension towards the chief executive.

The company response to questions about this anger was to say that it has been talking to shareholders – good plan! – to "provide more detail on the significant opportunities we see".

This may make up for what the City did not see, but they had better be plausible.

Now, big institutions don't vote against management very often. They make their displeasure known, then they tick the right box, the one that keeps the gravy train moving in the direction of executives and the City funds that manage our pensions (the pensioners themselves not so much).

But it will be very interesting to see what protest vote is registered on item 8 of the agenda at the annual meeting on 15 May. That's "to re-elect Simon Lee as a director". And Item 3, "to approve the directors' remuneration report", might also warrant some attention.

When it emerged that Mr Lee had taken a 32 per cent pay rise to £1.5m, in the very year that the divi fell by the same amount, jaws dropped. One shareholder tells me: "The only reason to hold RSA shares is the divi. You don't buy it for the excitement. People thought they understood this business. We are now looking at it and going, hang on..."

The resentment over Mr Lee's pay is partly attributed to a car-crash interview he gave to The Sunday Times at the start of the year. In it, he complained that his shareholders were "too British" and that "we have very few conviction investors". Some sold – with conviction – upon reading this.

Other revelations in the interview: he likes James Bond, used to play cricket with the former England swing bowler Richard Ellison, and enjoys Coldplay (his greatest crime by far, you might think).

RSA insiders play down talk of a rebellion. One or two investors have "made a bit of noise", but that's that, they reckon.

Maybe. And maybe Mr Lee will be given a chance to put things right.

Still, if you are going to slash the divi, take a pay rise and then complain about your shareholders, you had better be awfully sure that things are going to turn out well.

Ballsy, I'd say.