Investors force Aviva boss to reject pay rise
ACTIVIST shareholders yesterday claimed victory after the boss of Britain’s second biggest insurer was forced into a humiliating climbdown on the size of his pay packet.
Andrew Moss, chief executive of Aviva, decided to waive his 2012 salary increase as part of a review of the firm’s executive pay policy, launched in response to pressure from investors.
Moss had been due to receive a 4.8 per cent increase to his £960,000 basic pay – worth around £46,000 – despite his company underperforming throughout 2011. Last year his total renumeration package hit £2.7m, in addition to around £2.5m as part of a long-term incentive plan.
But City A.M. understands that the main source of investor anger is not Moss’ pay but the £2.5m “golden hello” given to Trevor Matthews, the former Standard Life boss who has been appointed as Aviva’s head of development markets.
“Shareholders have reacted badly to the pay of executive directors which has been linked to operating profit rather than bottom line profit – which includes the impact of the turmoil in Europe,” said Barrie Cornes, an analyst at Panmure Gordon.
“Aviva will rightly come under fire for failing to address the winds of change impacting director remuneration over the least 12 months.”
Investor group Pirc has encouraged shareholders to vote against the package at Aviva’s AGM on Thursday.
“We take the views of our shareholders very seriously,” said Scott Wheway, chairman of Aviva’s remuneration committee. “A number of shareholders have indicated that they would like to see an even closer correlation between our pay packages and shareholder returns.”
Shares closed down 2.7 per cent at 308p, having already lost 29 per cent of their value since July 2011.