Shareholder springboard

30 April 2012 By George Hay Follow @gfhay

The UK insurer is the latest company to review executive pay in response to investor pressure. Shareholders may have been emboldened by a rising tide of pay revolts elsewhere. But discontent at Aviva seems as much about long-term underperformance as short-term pay excess.

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Aviva chief executive Andrew Moss is to waive a 4.8 percent pay rise that was due to come into effect from April 1. The move would have increased his basic salary from 960,000 pounds to just over 1 million pounds.
The UK insurer’s remuneration committee is also to review how future executives that join the company are compensated for any loss of entitlement from a previous role. Trevor Matthews, the incoming chief executive of Aviva’s UK operations, was awarded shares with a value exceeding 2 million pounds to compensate for the loss of long-term incentives from his previous job.
Aviva said in a statement on April 30 that the changes were prompted by investor concerns about whether overall levels of remuneration, driven by 2011 operating performance, appropriately reflected changes in shareholder value.
Scott Wheway, chair of Aviva’s remuneration committee, said he was disappointed that the committee had not represented shareholder views as well as it should have.
In 2010, Aviva’s operating profit was 2.6 billion pounds and net profit was 1.9 billion pounds. In 2011, thanks to changes in Aviva’s investment returns, operating profit was 2.5 billion pounds but net profit was only 60 million pounds.

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