DIVIDEND cuts, management turmoil and rewards-for-failure: there isn’t much that Aviva has done in recent years to win the acclaim of the City.
Reaching for slim pickings, though, the £3bn annual loss disclosed this month by new chief executive Mark Wilson was at least accompanied by a dose of contrition and an element of personal financial sacrifice.
Bosses at the insurance giant have seen their basic pay frozen and have foregone bonuses for another miserable year.
That is appropriate. Aviva’s fund management arm, a frequently-vocal agitator against corporate excess or incompetence, would have found its negotiating position at other public companies hopelessly hamstrung without an example being set by its own parent.
SPOTLIGHT ON RSA
ATTENTION now turns to RSA Insurance, which sparked the dividend-slashing frenzy with a swingeing 33 per cent cut last month.
I understand that its board believes similar measures to those at Aviva are necessary to appease investor anger.
RSA’s annual report, which will be published next week, will reveal that Simon Lee, its chief executive, was among a group of top managers who saw his annual bonus slashed last year commensurately with the dividend.
That is likely to mean that he received a bonus of roughly £480,000 for 2012.
RSA has, at least, a solid operational track record to point to in its defence. Unlike Aviva, it made a profit of nearly £500m last year. And even after its dividend cut, RSA is the ninth-highest yielding stock in the FTSE 100.
The company’s decision to retain more capital for acquisition opportunities is also difficult to fault.
Reports of pressure from dividend-focused investors calling Lee’s position into question were, at best, premature.
The alternative explanation is that running FTSE-100 companies suddenly has a job status more accustomed to Premier League football managers.
That said, this has left a blot on the copybook of one of the FTSE 100’s most affable bosses. Like the dog who starred in television ads for More Than, the RSA insurance brand, Lee knows a repeat performance won’t leave him feeling so Lucky.
CPP’S WOES ESCALATE
HAMISH Ogston, founder of the specialist insurer CPP Group, might wish he’d had his own identity stolen. The collapse in the company’s share price since the emergence of a Financial Services Authority mis-selling investigation has left those who bought in when CPP floated furious.
With just 10 days before a deadline to secure a refinancing deal with its lenders, further bad news might be on the way.
Estimates to date have suggested that the total redress owed to CPP customers was likely to be in the region of £200m.
Insiders say the final bill could in fact be a multiple of that sum, with some suggesting that a figure of £600m is not inconceivable.
Fresh from the loss of another major contract with Santander UK and yesterday’s warning over the value of its shares, not much is going right for CPP – and time is running out.
GOOD DAY FOR BAD NEWS
GEORGE Osborne had so much bad news to divulge that for any devious chief executive, yesterday afternoon was the ideal time to slip something out under cover of economic darkness.
Reverting to type? Step forward, Barclays. More than £17m in shares for Rich Ricci, its investment banking chief, and £5.5m for Antony Jenkins, its chief executive, disclosed on Budget Day, less than a month after the bank had pledged a more restrained approach to rewarding its executives.
Accident or not, such apparent cynicism does Jenkins few favours if he is genuine about improving the public image of the bank.
Yesterday was a setback for his effort.
Mark Kleinman is the City editor of Sky News @MarkKleinmanSky