Mr Woodward's 1.6 million shares in Nelson, equal to a 3.4 per cent stake, are valued at pounds 2.88m by Forbes' 185p bid price - a 43 per cent premium to Tuesday's closing price of 129.5p. Shares in Nelson closed 50p higher yesterday at 179.5p.
The directors together own 11.2 per cent of the company. Louis Erhard, one of the directors, will bank pounds 1.8m from the deal, and John Percy-Davis, chief executive, will gain in excess of pounds 650,000.
The windfall for the directors comes just four months after they said they would forfeit their bonuses because they had underperformed in the previous year.
Forbes, which provides risk management, insurance and employee benefit services, said yesterday that it had bought Nelson to strengthen its position in Asia and Latin America. Nelson's network is particularly strong in the emerging markets in Asia.
Paul Heinamann, Forbes' group managing director, said the new company would be "well positioned to become a leading operator in the short term in risk management markets in developing countries and to become one of the leading mid-sized international insurance brokers with a clear focus on emerging markets".
Nelson said last night the deal made sense as the two companies had a history of joint ventures and Forbes already owned 9.9 per cent of the UK company.
The deal comes at a time of continuing consolidation for the industry. In the past year, the world's six largest insurance brokers have been reduced to four.
Nelson, which reported a 25 per cent drop in pre-tax profits to pounds 8.9m in March this year, has offices in 20 countries and around 1,500 employees.
Mr Woodward and Mr Percy-Davis will continue to hold their present positions at the company for at least three years.