BRITISH insurer Prudential is planning a multi-million pound bonus scheme to lock in executives at American International Assurance, the Asian business it is in the process of taking over.
Prudential will rubber-stamp more than £20m incentivisation payments to AIA’s key staff after two senior figures, finance director Steve Roder and chief legal counsel Peter Cashin, resigned last week.
The pair objected to Prudential’s proposed $35.5bn (£23.8bn) acquisition of AIA due in the summer. The deal has derailed AIA’s planned flotation on the Hong Kong stock exchange, which would have produced windfalls worth millions of dollars for top employees as well as the US government, which has a majority stake in AIA’s parent American International Group.
A City source said: “Incentive agreements will be an important part of ensuring integration. They want to retain the best people – that’s what happens with acquisitions.”
It is understood this round of bonuses will be paid by AIG and approved by Prudential. A longer-term programme of incentivisation may also be required to tie in important individuals during the lengthy process of AIA’s assimilation by Prudential.
The Holborn-based insurer’s play for AIA was applauded as a bold move when it was first announced. But the deal has been beset by difficulties as institutional investors complained about lack of clarity around the $20bn rights issue pencilled in for May to part-fund the offer.
FAST FACTS | PRUDENTIAL
● The British firm has told investors its merger with AIA will be earnings neutral by 2012.
● Chief executive Tidjane Thiam was forced to turn down a board role with Société Générale this month after shareholders vented spleen.