LEADING City fund manager Fidelity is planning to vote against the re-election of Prudential’s chairman Harvey McGrath in protest at the botched bid for Asian insurer AIA last year, City A.M. learned yesterday.
It is among a group of institutional investors expected to oppose the re-election of McGrath, Prudential’s chairman since 2008, at the annual meeting on Thursday.
All directors including chief executive Tidjane Thiam are up for re-election but investors’ wrath is focused on McGrath for mishandling shareholders and regulators alike in the $35bn (£21.5bn) AIA takeover.
City A.M. understands Fidelity has consistently opposed McGrath’s chairmanship since the bid and views the vote as the clearest opportunity to demonstrate its displeasure. It holds 1.76 per cent of Prudential’s shares and first made its views on McGrath clear some time ago, calling for change in the boardroom.
About ten to 20 per cent of the Pru’s institutional investors are thought to be voting against McGrath’s re-election, though the final results will only be shown at tomorrow’s meeting and may differ from this.
While this level of opposition would not be enough to topple McGrath, who has been the Pru’s chair since 2008, it would undermine his credibility and may prompt calls for his resignation.
One shareholder told City A.M. yesterday that such a vote would “pretty much put him on borrowed time”.
“You could argue that the damage is done and if the company moved into another M&A situation in say the next six months, would you be confident about his stewardship? And if not, you should maybe not support his re-election,” he said.
A number of the 163-year-old insurance giant’s investors have shared their unhappiness at McGrath’s leadership in recent weeks.
Prudential’s advisers on the bid – Credit Suisse, HSBC and JPMorgan – are also currently being investigated by City regulator the Financial Services Authority, which has ordered the insurer to commission a Section 166 report from Clifford Chance into failures of advice, systems or controls.