Royal London boss Phil Loney is to hand a quarter of his bonus to charity for the second year in a row amid mounting controversy over excessive pay at the top of British companies.
The move comes as the insurer prepares to reveal details of his 2013 package which could come close to £2m.
As the UK’s biggest mutual insurer, Royal London is owned by around half a million policyholders rather than shareholders. However, that has not stopped it from becoming embroiled in controversy over pay.
This year’s numbers, which will be published in its annual report today, will be particularly closely watched given that the mutual “dividend” paid to the policyholders who own the business was cut to £81m for the 2013 financial year down from £88m the previous year. It was also £88m in 2011.
The dividend is added to bonuses paid through so called “with-profits” life insurance policies and so will not actually become available to them until their savings mature, which may not be for many years.
Royal London actually boasts 5.3 million policyholders in total but only a fraction of them have ownership rights through their policies.
Mr Loney, who joined the insurer from Lloyds, was embroiled in controversy when he took on the job of chief executive over the “golden hello” he was paid. The payment, of nearly £1.3m, was to compensate him for leaving Lloyds.
His predecessor Mike Yardley also received a multi-million pound severance package upon his departure.
Mr Loney’s pay last year totalled £1.7m, after an inflation busting rise of more than 20 per cent from the previous year’s £1.4m.
The pay to bosses of big mutuals has come under scrutiny in the wake of events at the Co-op, one of whose former directors complained it had been paying too much for “at best average performance” in a series of email correspondence released by the Treasury Select Committee.
Blue-chip companies including Barclays and Financial Times owner Pearson have also been given bloody noses over pay by investors as the season for shareholder meetings gets into full swing.
Royal London now owns the Co-op’s life insurance business, which the latter sold to raise cash to prop up its beleaguered bank.