Aviva boss Andrew Moss quits amid pay criticism
Tuesday 08 May 2012
Shareholders have claimed another high-profile scalp as Britain's biggest insurer announced the abrupt exit of its chief executive.
Andrew Moss's decision to stand down with immediate effect comes a week after investors voiced their discontent over the company's performance by staging a massive protest vote against Aviva's annual pay report.
However, Mr Moss is still in line to walk away with a severance deal worth £1.7 million, including 12 months salary, a portion of his bonus and a pension contribution.
His departure is the latest example of shareholder activism after two other chief executives, David Brennan at AstraZeneca and Trinity Mirror's Sly Bailey, stepped down amid increasing frustrations in the City.
The backlash over pay and bonuses continued when more than 51% of shareholder votes failed to back bookmaker William Hill's remuneration report, including a £1.2 million pay-to-stay award for chief executive Ralph Topping.
Despite the vote at William Hill, the company indicated it would not clawback any of Mr Topping's bonus after chairman Gareth Davis said "it was the right thing for the group, the shareholders and the longer-term future of the business that we retain Ralph Topping's services at this important time".
Barclays, Premier Foods and Xstrata have all suffered significant protest votes in recent weeks, while Unilever, WPP and Centrica are expected to face similar revolts at their AGMs in the coming days.
It is a trend that will be welcomed by Business Secretary Vince Cable who has called for major shareholders to do more to rein in boardroom pay. His department has just finished a consultation over whether to introduce binding shareholder votes which would see companies require the support of 75% of investors to pass pay deals. Votes are currently advisory.
James Barty, senior adviser on financial policy at leading think-tank Policy Exchange, said: "Shareholders are no longer tolerating pay for mediocre or sub-standard performance. We believe this serves as a wake-up call to boards across the UK and, in particular, the remuneration committees."
Investors welcomed Mr Moss's departure as Aviva shares rose opened nearly 4% higher, adding £400 million to its market value, at £9.1 billion.
His departure came after 59% of votes failed to back Aviva's pay report last week in one of the City's biggest-ever shareholder protest votes. Around 10% went against or withheld their votes on the re-election of Mr Moss.
Under the pay scheme, Mr Moss was also awarded a £1.2 million bonus, equal to 120% of salary, while Trevor Matthews, Aviva UK chief executive, was awarded a £45,000 bonus despite just joining the board on December 2.
Lord Sharman, outgoing Aviva chairman, confirmed Mr Moss had approached him about stepping aside to make way for new leadership.
Lord Sharman spoke of "progress that has been achieved under Andrew Moss's leadership".
He said: "Through the global financial crisis he led the consolidation of our international presence and the integration of 40 brands into the very powerful single Aviva brand."
Aviva's share price has declined around 60% since Mr Moss took the helm in July 2007.
The performance has most recently been hit by the company's exposure to troubled eurozone economies such as Italy and Spain, and shares are around 30% lower than they were a year ago.
Mr Moss was set to unveil his new strategy at an investor day on May 24 but this has been postponed until after a board meeting in June.
Mr Moss will be replaced on an interim basis by incoming chairman John McFarlane who will become executive deputy chairman with immediate effect and executive chairman from July 1.
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