Parent company Covea takes action over concerns relating to payments due in 2012
French parent Covea has sacked Swinton’s entire executive team in a dispute over the board’s performance-related share scheme payments.
Swinton’s directors’ pay increased by 1,000% for the 2009 year, Insurance Times can reveal. Directors’ pay shot up from £1.5m in 2008 to £16.3m in 2009. Furthermore, the top director pocketed £4.9m in 2009.
However, French parent Covea said its concerns centred on payments due to be made in 2012.
A spokesman named the five sacked board members as chief executive Peter Halpin, marketing director Nick Bowyer, finance director Anthony Clare, operations director Jackie Ordish and IT and business change director Adrian Hazeldine.
A company statement said: “Covea has taken this action because it had lost confidence in the executive board. It was concerned that the former executive board has put their short-term interests ahead of the long-term interests of the company and its employees.
“The issue concerns the executive board’s performance-related share scheme payments, due to have been made in Q1 2012.
“Covea, as the shareholder, has a responsibility to protect Swinton and to take appropriate action where it identifies any circumstances not beneficial to the business as a whole.”
Covea became concerned about performance-related pay earlier this year. In the run-up to the sackings, Covea tipped off the FSA.
Biba chairman and Swinton Holdings board chairman Patrick Smith was not involved, the spokesman said. “As far as non-executives are concerned, they are not implicated in the situation. Patrick Smith is chairman of the Swinton Holdings board, making him two steps removed from the day-to-day running of Swinton Insurance.”
Covea announced that the new executive board will be Christophe Bardet as chief executive, Charles Bellringer as financial director, Rob Hornby as IT director and Kelly Ogley, who will be appointed operations director as previously planned.
The company did not go into full details about the performance-related pay.
In 2008, Swinton Group Limited’s post-tax profits were £28.9m. The profits fell during the credit crunch, down to £21.8m in 2009, but bounced backed to £27.1m last year.
Directors’ pay - remuneration, emoluments and pensions - fell from £16.3m in 2009 to £1.7m last year.
Aviva trading director Phil Bayles said he looked forward to working with the new Swinton board. “Although we are sad to see Peter Halpin leave, as obviously he was widely respected, we have a long and successful relationship with Swinton and we look forward to carrying that on with the new team. There are many people at management level who will remain in situ.”
The sacking of the entire Swinton board over performance-related pay is bound to raise eyebrows at the top level of government.
In October, business secretary Vince Cable launched a consultation on reforming reporting requirements. He hopes to make it easier for shareholders and the media to scrutinise boardroom pay.
His stance is backed by the ABI, which this month demanded banks curtail bonuses. The ABI is a powerful stakeholder in the banks.
UK insurers have £1 trillion under asset management, part of which is invested in corporate bank bonds.
US-based firms operating in the UK will fall outside of the government’s pay review.
Last month, Insurance Times revealed that Willis chief executive Joe Plumeri was compensated to a total of $12.1m last year and Aon boss Greg Case netted $20m.
The entire Aviva board was remunerated £7.75m - around $12.4m.
We say …
● Former Swinton chief executive Peter Halpin is still widely respected in the industry, so it would not be a surprise to see him end up working at one of Swinton’s rival brokers.
● A challenge for the new Swinton management team to tackle is over how they can make up revenue lost in the referral fee ban.
● A big question for Swinton parent Covea will be over how the performance-related share schemes were allowed to be signed off originally.