REVOLUTION IN THE CITY
SHAREHOLDERS yesterday unleashed their wrath on leading blue chip businesses with an unprecedented wave of rebellion against executive pay deals.
Businesses including Aviva, UBS and Inmarsat suffered substantial rebellions against remuneration packages at AGMs held yesterday. And last night Trinity Mirror boss Sly Bailey unexpectedly handed in her notice as leading shareholders prepared to mount a campaign against her £1.7m pay package.
The largest revolt was at insurance giant Aviva, where 59 per cent of shareholders failed to back proposed remuneration levels, protesting that executive pay at the insurer has continued to climb despite a persistently weak share price. Some called for directors – including chief executive Andrew Moss – to quit.
“The figures are evidence enough to condemn your abject performance without reservation,” said private investor Philip Meadowcroft, who estimated Aviva’s total boardroom pay has risen 90 per cent in the last four years as its shares fell 62 per cent.
The vote is advisory only and cannot block the insurer’s pay plans but it was enough to force Aviva’s outgoing chairman, Colin Sharman, to issue an apology to investors and pledge that in future the board will listen more closely to shareholder concerns.
It was only the fourth time that a FTSE 100 firm has seen investors reject a remuneration report since advisory votes began in 2003.
“Shareholders are registering their displeasure with companies that have raised levels of compensation dramatically during the good years and failed to reduce them following the downturn,” said Adrian Hoggarth of law firm Prolegal.
Swiss bank UBS was also embarrassed when more than one third of its shareholders rejected its remuneration plans, including those for incoming chairman Axel Weber and investment bank co-head Andrea Orcel. Rebellions by large shareholder groups are a rarity in Switzerland but sub-par profits and a $2bn rogue trading scandal energised a usually docile investor base.
British satellite company Inmarsat also saw 37 per cent of shareholders reject a pay deal for chairman Andrew Sukawaty who remains on £614,000 despite handing over the chief executive role to Rupert Pearce. A spokesman said last night that this was a “transition phase” and that “the shareholders who voted against it are US proxy managers” who do not understand the “unique” situation.