Aviva boss averts five-year pay freeze call

Insurance giant Aviva has seen its shares surge higher after it increased its dividend payment and said it is planning another share buyback programme (Anna Gowthorpe/PA) (PA Archive)

Aviva chairman John McFarlane has fended off demands from shareholders for a five-year pay freeze and calls for the head of the insurer's remuneration committee.

The Norwich Union Policyholders Action Group, which represents a small group of retail investors, pressed for the resignation of Scott Wheway at today's annual meeting amid anger at generous severance packages handed to Andrew Moss, who quit as chief executive after a pay revolt at last year's AGM, and Igal Mayer, who ran the insurer's European business.

This year Aviva scrapped bonuses for all directors and pay for its top 400 earners but the action group is demanding the freeze unless the shares more than treble to £10.

Mr McFarlane said mistakes had been made by the company in the past when calculating pay for former executives such as Mr Moss. But he would not commit to the five-year pay freeze and said the group had spoken to shareholders about its pay structure.

He said of Mr Wheway: “We want him on the board. He is a competent director and works well with our major shareholders.”

The group avoided a repeat of last year's shareholder revolt with just 11.7 per cent of investors failing to back its pay report compared to 54 per cent last time around.

The meeting was relatively calm apart from when one frustrated audience member mounted the stage to unfurl a banner that read “Aviva are crap”.

He was swiftly ushered back to his seat by stewards.

Mark Wilson, the group's new chief executive, defended the group's decision to cut its dividend earlier this year. Aviva cuts its final payout by 44 per cent in March to pay down debt.

“Cash flows from the businesses were too tight to sustain the historic levels of dividend and reduce debt at the same time,” Mr Wilson said.

“Unless we took steps to tackle these problems, it would be like trying to walk up an escalator that is going down. You can do it for a while but in the end the escalator will win.

”We need to bring debt levels down. This is why we must - and will - meet our cost savings target of £400m this year.“

Aviva shares closed down 1p at 322.9p today.