Shareholders reject Aviva pay plans
Thursday 03 May 2012
Aviva suffered a major shareholder revolt today after more than half
of the votes at its annual meeting failed to back the insurer's pay
In another sign of growing investor activism, the defeat came despite chief executive Andrew Moss this week waiving a near-5 per cent pay rise which would have taken his annual salary over the £1 million mark.
Some 50 per cent of votes placed outside the AGM went against the pay report, while an additional 9 per cent were withheld, in one of the biggest ever shareholder protest votes.
The remuneration report would have been thrown out completely had new measures to give shareholders binding votes, as put forward by Business Secretary Vince Cable and backed by investor groups included the Association of British Insurers, been brought into effect.
The embarrassing defeat follows a similar showdown between shareholders and banking giant Barclays, in which nearly a third of votes failed to back its remuneration report after chief executive Bob Diamond took a £17.7 million pay package for 2011.
Similar scenes were playing out at Hovis to Mr Kipling owner Premier Foods' annual meeting, where just over 30 per cent of shareholder votes failed to back the remuneration report.
Premier, which saw its shares slide around 70 per cent throughout 2011, paid around £3.5 million to its executives last year, including a £1.9 million "golden hello" for new chief executive Michael Clarke when he joined eight months ago.
Back at Aviva, Mr Moss was awarded a 4.6 per cent rise in March on his £960,000 annual salary but has decided not to accept the increase following talks with major investors.
Mr Moss was also awarded a £1.2 million bonus, equal to 120 per cent of salary, while Trevor Matthews, Aviva UK chief executive, was awarded a £45,000 bonus despite just joining the board on December 2.
Aviva chairman Lord Sharman apologised to shareholders at the AGM for ignoring their views when setting executive pay.
Lord Sharman said: "We recognise that a number of shareholders feel that we have not reflected their views, and overall shareholder value, in the judgments we made on remuneration and for this the Board and I apologise."
Pensions Investment Research Consultants (Pirc) dubbed Aviva's executive pay awards "excessive", while the ABI issued an "amber alert" warning over the remuneration report.
Aviva said its shareholders had expressed concerns over pay for new recruits as well as whether overall levels of remuneration reflected changes in shareholder value through the year.
Aviva's shares have been hit by their exposure to troubled eurozone economies such as Italy and Spain, and are around 30 per cent lower than they were a year ago.
The insurer earlier this week said its remuneration committee believed that the proposed levels of remuneration were "appropriate reward" but will now review how it pays future joining executives for the loss of entitlement from their previous role.
Scott Wheway, chairman of the remuneration committee, said: "We take the views of our shareholders very seriously. I am disappointed that we haven't done that as well as we should have on this occasion.
"A number of shareholders have indicated that they would like to see a different approach to the way we compensate senior directors on recruitment and an even closer correlation between our pay packages and shareholder returns.
"Having listened to them, we have sought to address their concerns and will continue to engage with them on this matter."
Aviva achieved record operating profits of £931 million in its UK life insurance division for 2011, with gains in its core markets of workplace savings, annuities and equity release products and protection.
In its general insurance business, where it is the UK market leader, Aviva's profits were up 7 per cent to £520 million after the roll-out of direct pricing to motor insurance brokers and the launch of its quotemehappy website.
- 1 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 2 How to turn off/stop 'seen by' on Facebook: Disable it to make your chats seem less passive aggressive
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 'We're not heroes, just tourists': Swedish police officers on holiday stop vicious assault on New York subway
- 5 Buckingham Palace guard who attacked passers-by in 'most most violent piece of CCTV footage' police officer had seen walks free
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...