The chief executive of Britain’s second-biggest insurance group Aviva stepped down on Tuesday, becoming the latest victim of a growing shareholder revolt over pay for top managers.
Top British companies, and some firms abroad, are facing a wave of investor activism as shareholders rebel over high boardroom pay amid under-performance in the poor economic climate and state moves to clamp down on corporate greed.
“Aviva plc announces that Andrew Moss, chief executive officer (CEO), will be leaving the group and will cease to be chief executive with immediate effect,” the insurer said in a shock announcement on Tuesday.
Aviva said its incoming chairman John McFarlane would assume executive duties with immediate effect, tasked with helping to find a new chief executive.
“My first priorities are to regain the respect of our shareholders by eliminating the discount in our share price and to find internally or externally the very best leader to be our future CEO,” McFarlane said in a statement.
“I will meet all of the major investors over the coming days and weeks.” Investors saluted the boardroom shake-up, with Aviva’s share price soaring 5.19 per cent to 318 pence and shooting to the top of London’s benchmark FTSE 100 index, which was flat at 5,655.96 points.
Last week saw 54 per cent of its shareholders vote against Aviva’s remuneration report.
Including abstentions, almost 59 per cent of investors refused to endorse the group’s executive pay policy, in a result announced at Aviva’s annual general meeting in London on Thursday.
The rejection vote was non-binding but nevertheless a major embarrassment for Aviva, which is Britain’s second-biggest insurance company after Prudential.
Aviva’s defeat came despite Moss bowing to investor pressure and waiving a pay rise that would have taken his salary above £1.0 million (1.24 million euros, $1.61 million).
Moss was last month awarded a 4.6-percent increase on his annual salary of £960,000 but decided to decline it. Aviva added on Tuesday that Moss “felt it was in the best interests of the company that he step aside to make way for new leadership.”
Aviva’s outgoing chairman Colin Sharman however said the group “should acknowledge the progress that has been achieved under Andrew Moss’s leadership.
“Through the global financial crisis he led the consolidation of our international presence and the integration of 40 brands into the very powerful single Aviva brand.”
Sharman apologised to investors last week for ignoring their views when setting pay.
“We recognise that a number of shareholders feel that we have not reflected their views, and overall shareholder value, in the judgments we made on remuneration and for this the board and I apologise,” he said.
“We also recognise that companies need to engage with shareholders on a more proactive basis around the sensitive area of executive remuneration and Aviva will continue to consult and engage with shareholders in this regard.”
Last week’s annual general meeting took place with Aviva’s share price, which has been hit by its exposure to debt-plagued Eurozone economies, standing almost 30 per cent lower compared with one year earlier.
Moss’s departure meanwhile comes after British newspaper publisher Trinity Mirror last week said that its chief executive Sly Bailey would step down amid a looming shareholder revolt over her pay package. And the chief executive of Anglo-Swedish pharmaceutical group AstraZeneca, David Brennan, recently announced his retirement amid investor concern over his stewardship of the group.
At Barclays bank, meanwhile, almost one third of its shareholders chose not to back its executive pay awards late last month amid controversy over chief executive Bob Diamond’s hefty wage package.
In April, Citigroup shareholders rejected the board’s compensation plan for the US bank’s top five executives.
London, May 8, 2012 (AFP)
