Takeover tussle has £5m prize for boss

Mr Thiam has been earmarked shares worth a potential 2.7m under a rolling three-year incentive scheme, on top of a 900,000 salary and annual bonus windfall of up to 1.6m.

The insurance giant's annual report shows that its chief executive, who took on the top job last October, is in line for up to 300 per cent of salary in deferred shares from the long-term performance pay plan.

This long-term plan could leave him with stock worth nearly 9m by 2013.

He is entitled to an additional annual bonus worth a maximum of 180 per cent of salary, of which half must be taken in deferred shares.

Details of Mr Thiam's 2010 pay and bonus deal came yesterday as the Pru was embarking on a mammoth $35.5bn 23.4bn takeover of AIG's Asian arm, AIA.

It will be a transformational deal for the group and one of the biggest overseas acquisitions yet made by a UK company.

But the Pru has to get shareholders on board for a $20bn (13.2bn) fundraising to finance the acquisition in what will mark the largest rights issue yet seen in the UK.

The group is fast-tracking a dual share listing in Hong Kong to widen the net for its record cash-call, which is reported to have met a lukewarm response from some major investors.

The Pru has already allocated Mr Thiam 510,986 shares worth just under 3m at yesterday's prices as part of the three-year incentive scheme.

But to get the maximum amount payable after a three-year vesting period he will have to deliver shareholder returns 20 per cent higher than a peer group of insurers for the next three years.

If he delivers a shareholder return that is 10 per cent higher, he will get 75 per cent of the maximum payout and if the return is equal to peers, he will be entitled to 25 per cent.

Yesterday's report also showed Mr Thiam picked up a 1.1m bonus last year and saw his salary increase from 875,000 to 900,000 on January 1.

Mr Thiam recently backed down over plans to take up an additional board role at French bank Societe Generale after reported shareholder fury.

The plans were said to have drawn heavy criticism from major Pru shareholders, concerned about his time being split during a crucial period for the insurer.

The AIA takeover is a gigantic deal for Prudential, transforming the group into the biggest player in Asia and doubling its size.

It is set to release the price and prospectus for its rights issue at the end of the month or early May.