Aviva cuts boss's maximum payout to head off shareholder revolt

Aviva has reduced the maximum payout for its chief executive under a long-term share plan following opposition to the potential £3.4m award for this year.

The insurer had proposed granting Mark Wilson shares worth up to 3.5 times his £980,000 salary. The award could have taken his total earnings for 2015 to £6.7m.

However,after an objection this week by the shareholder adviser, believed to be Institutional Shareholder Services (ISS), the maximum payment under the long-term incentive plan was cut to three times Wilson’s salary, or £2.9m.

ISS also took issue with the maximum long-term incentive plan award for Aviva’s finance director Tom Stoddard. The company cut his maximum payment to 2.25 times his £675,000 salary from 2.5 times. The change means the most he can earn from plan is £1.52m.

Patricia Cross, who chairs Aviva’s remuneration committee, said: “The board was disappointed to receive feedback this week from a shareholder voting agency which expressed concern over the proposed [long-term incentive plan] awards, despite the tangible progress made by the management team and the award being within the company’s remuneration policy.”

Cross said shareholders had generally supported Aviva’s pay proposals before ISS’s late intervention. The revised package is intended to head off any investor revolt at Aviva’s AGM on 29 April.

Executive pay is a touchy subject at Aviva after its former chief executive Andrew Moss was forced out during the shareholder spring of 2012. At an acrimonious AGM, 60% of shareholders withheld support from Moss’s pay deal of up to £5m, sealing his fate.

Last month, Aviva announced better-than-expected annual operating profit up 6% to £2.17bn as it prepared to take over Friends Life in a deal engineered by Wilson. Aviva’s asset management arm was fined £17.6m this year by the Financial Conduct Authority for systems failures in 2013.

Executives at some of Britain’s biggest companies are braced for battles over pay and other matters during this year’s AGM season. WPP and BG Group are in investors’ sights over pay along with the insurer Prudential. Aviva’s rival paid its chief executive Tidjane Thiam £11.8m in 2014.

ISS is the biggest adviser to institutional investors on how to vote on pay and other governance matters. The US-based group demonstrated its clout last year when its objections helped force a climbdown at BG over the pay deal for new boss Helge Lund.

Powered by Guardian.co.ukThis article was written by Sean Farrell, for theguardian.com on Friday 10th April 2015 17.43 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010


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