More pay rebellions on way as Aviva boss resigns

Have your say

ANGRY shareholders are expected to vote down future fat-cat pay deals after an investor rebellion claimed the scalp of Aviva’s chief executive Andrew Moss.

Mr Moss resigned with immediate effect yesterday after more than half the insurance firm’s shareholders refused to back its pay report.

Aviva’s chairman Lord Sharman said Mr Moss had told him he thought it was in the best interests of the company if he stepped down to make way for new leadership.

There was further controversy yesterday afternoon when Aviva announced that Mr Moss will receive a payout worth nearly £1.5m.

Mr Moss will receive his £960,000 basic salary in lieu of 12 months notice, £300,000 in “full and final settlement” of his outstanding bonus claims and £209,000 in pension benefits.

All eyes will be on consumer goods giant Unilever’s annual meeting today with shareholders expected to raise concerns about chief executive Paul Polman’s six per cent increase in salary, taking him close to £975,000.

Anger is also brewing at advertising agency WPP over the pay deal awarded to founder and chief executive Sir Martin Sorrell, who is understood to have made over £12m in salary, bonuses and benefits last year. WPP investors are expected to vent their spleen at the agency’s annual meeting on June 13.

Bookmaker William Hill faced a revolt at its annual meeting yesterday over the pay package awarded to chief executive Ralph Topping, which includes a £1.2m retention bonus and an 8.3 per cent salary rise. Almost half the group’s shareholders voted against the pay package.

Aviva investors called on Mr Moss to step down at a stormy annual meeting last Thursday, when they asked why director pay had continued to rise at a time when the group’s shares have performed badly.

Espirito Santo analyst Joy Ferneyhough said: “He has finally fallen on his sword after increasing pressure in recent weeks from shareholders and the media over pay and share price performance.

“It has been clear for a number of months and years that there has remained a section of shareholders unhappy with Mr Moss’s position.”

Mr Moss offered to waive a near five per cent pay rise last week, but this was not enough to appease investors. The increase would have taken his annual salary over the £1m mark.

Mr Moss will be replaced on an interim basis by incoming chairman John McFarlane, who becomes executive deputy chairman with immediate effect and executive chairman from July 1. Mr McFarlane will take on Mr Moss’s duties until a replacement is found. Analysts said candidates include internal favourites finance director Pat Regan and chief executive of Aviva UK Trevor Matthews.

Mr Matthews joined Aviva last December and has responsibility for the York-based life and pensions businesses.

Externally, Andy Haste, the former chief executive of RSA, is seen as a serious candidate.

Mr Moss’s departure follows reports that two major investors called on Mr McFarlane to replace Mr Moss at the earliest opportunity.

Some 59 per cent of votes failed to back Aviva’s pay report, in one of the biggest ever shareholder protest votes, while 10 per cent went against or withheld their votes on the re-election of Mr Moss.

Analyst Eamonn Flanagan, at Shore Capital, said: “The rolling stone of shareholder activism/pressure claimed another victim with the announcement that Andrew Moss will be leaving the group and will cease to be chief executive with immediate effect.

“This is the culmination of a period of intense media scrutiny on Aviva, with shareholders rejecting the group’s remuneration report at last week’s AGM, and a significant period of underperformance by the company both in terms of share price and operational performance.”

Discontent among investors in Britain over pay has spread outside financial services. Premier Foods and satellite company Inmarsat suffered rebellions at their annual meetings last week.

Barclays, Xstrata and AstraZeneca have all suffered significant protest votes against management and pay.

Former chief executives David Brennan at AstraZeneca and Trinity Mirror’s Sly Bailey have both stepped down.

Aviva, which has around 4,500 Yorkshire employees, has its UK life and pension business based in York.

It has about 2,600 staff in York and 1,600 in Sheffield.

Opinion: Page 13