Shareholders attack 'greedy' Aviva for raising boardroom pay

Aviva, the UK's second-largest insurer, was yesterday accused of "corporate greed" by raising executive pay in the year its dividend was slashed, its share price almost halved and policyholder payouts were cut.

Richard Harvey, the chief executive, saw his pay rise 45 per cent last year to £1.42m. This was made up of a basic salary and benefits of £761,000 and bonuses of £660,000, including a pay award for the integration of Norwich Union and CGU, the merger that created Aviva in 2000.

One private investor at Aviva's annual general meeting in London yesterday said public companies "have become parasites living off the community". Andrew Gibson, from Glasgow, said: "We are all victims of corporate greed."

Shareholders demanded that Aviva curb increases in pay and benefits to directors that included £70,000 towards the cost of Mr Harvey's car.

The company was also urged to tie remuneration to its own performance rather than the salaries paid to directors at competitors.

"The pay that you are awarding is upsetting the whole balance of pay in the UK," one shareholder said.

Pehr Gyllenhammar, the chairman of Aviva, defended the remuneration of its executives, and said Aviva's boardroom payroll was much lower than many of its peers in the insurance industry. "The greed factor has been partly destructive to the corporate world," he said. "On the other hand, you can not be the only exception."

Mr Harvey told shareholders last year that the company would cut its dividend by 40 per cent to conserve capital. The news sent Aviva's shares spiralling downwards. They have struggled to recover and dropped 48 per cent in 2002.

Aviva reported a 10 per cent fall in operating profits in 2002 and is expecting flat sales this year. The value of its investments on the stock market has plummeted and Aviva has had to offload much of its portfolio to stem its losses. Shareholders are not the only investors in Aviva to have suffered in the past year. The insurer has also cut payouts to 3.3 million customers by up to 15 per cent and some policyholders had their bonuses scrapped entirely.