Angry scenes as remuneration report is rejected amid bitter complaints over share price
Aviva suffered one of the most humiliating shareholder revolts over pay in corporate history at its annual general meeting, when almost two-thirds of investors refused to back its controversial remuneration proposals.
In the first case of an insurer’s remuneration report being rejected by shareholders, just under 50% voted against the pay package, while 9.1% abstained, despite last-minute concessions made by chief executive Andrew Moss to waive his own 4.8% pay increase this year.
Britain’s second biggest insurer also pledged to review its ‘golden handshake’ payments to new executives after UK chief executive Trevor Matthews received a £45,000 bonus for one month’s work last year as part of a £4.25m welcome package.
In a heated debate at last week’s AGM, shareholders vented their anger at chairman Lord Colin Sharman over excessive directors’ pay and the company’s slumping share price, and called for Moss and the board’s non-executive directors to quit.
Moss subsequently stepped down on Monday, despite being re-elected with 95% of the proxy votes.
Shareholder and founder of the Aviva Policyholder Action Group Philip Meadowcroft accused the board of being more concerned about their pay than the growth of the business. Over the past five years boardroom pay has rocketed 90%.
He said: “You, Lord Sharman and Mr Moss, along with the five non-executive directors, have presided over a massive year-by-year destruction of shareholder value and a
distinct lack of growth.”
Another investor, Michael Mason-Mahon, expressed concern over the number of high-profile departures in recent months, including former UK chief executive Mark Hodges and European chief executive Igal Mayer.
Earlier in the meeting, Moss, who pocketed almost £2.69m in pay last year, excluding £3.39m worth of share options, apologised for Aviva’s recent share price performance after its value was hit hard by the 2008-09 financial crisis and the eurozone debt crisis.
Aviva’s share price fell 31% last year and has plunged a total of 62% during Moss’s reign.
Pass notes: Revolts on pay
How does the Aviva vote compare with other financial services firms’?
Aviva’s is the latest in a string of shareholder revolts on remuneration, with 31.5% of Barclays investors failing to back its report and 26.9% rejecting chief executive Bob Diamond’s £17.7m pay packet.
Which other shareholders have staged revolts over directors pay?
The only FTSE 100 companies to have their remuneration reports defeated are RBS (90% in 2009), GlaxoSmithKline (63% in 2003) and Shell (61% in 2003).
What policies have been suggested to address the issue?
Shareholder group Pensions & Investment Research Consultants has supported business secretary Vince Cable’s recommendation that pay policies should require 75% shareholder backing.