British insurer Aviva said Thursday that more than half of its shareholders have failed to back its executive pay awards, in the latest sign of growing investor anger over boardroom pay.
Aviva said in a statement after its annual general meeting in London that 54 per cent of shareholders voted against the insurer’s remuneration report.
Including abstentions, almost 59 per cent of investors failed to endorse the group’s executive pay policy. The rejection vote is non-binding but is nevertheless a major embarrassment for Aviva, which is Britain’s second biggest insurance company after Prudential.
Just last week, meanwhile, British bank Barclays revealed that almost one third of its shareholders had chosen not to back its annual executive pay awards amid controversy over chief executive Bob Diamond’s huge wage package.
Aviva’s defeat came despite chief executive Andrew Moss bowing to investor pressure and waiving a pay rise earlier this week that would have taken his salary above £1 million ($1.6 million, 1.2 million euros). Moss was last month awarded a 4.6-percent increase on his annual salary of £960,000 but decided to decline the hike.
Investor group Pensions Investment Research Consultants (Pirc) had called on Aviva shareholders to vote against its boardroom pay awards, dubbing them “excessive”.
Aviva chairman Lord Colin Sharman apologised to investors on Thursday for ignoring their views when setting pay levels for management.
“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 told the AGM.
“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.”
Scott Wheway, chairman of Aviva’s remuneration committee, agreed that the group would now seek to address shareholders’ concerns.
“We take the views of our shareholders very seriously. I am disappointed that we haven’t done that as well as we should have on this occasion,” Wheway told investors.
“A number of shareholders have indicated that they would like to see a different approach to the way we compensate senior directors on recruitment and an even closer correlation between our pay packages and shareholder returns.
“Having listened to them, we have sought to address their concerns and will continue to engage with them on this matter.”
Earlier this year, the British government launched proposals that would give shareholders binding votes over executive pay, in a package of measures aimed at cracking down on excessive boardroom salaries and bonuses.
Barclays had announced last Friday that 32 per cent of shareholders had either voted against or withheld support for the bank’s 2011 remuneration report.
London, May 3, 2012 (AFP)
