Another day, another set of exasperated shareholders air their grievances over allegations of boardroom fat-cattery. This time Aviva was in the firing line, whose AGM today turned out to be rather more boisterous than is usual in the sensible world of insurance. Half of the votes cast by shareholders were against Aviva's pay proposals, even after last minute adjustments earlier this week.
Aviva boss Andrew Moss had decided that discretion is the better part of valour and turned down a rise of 4.6% on Monday. The rise would have tipped his basic salary over the potentially-inflammatory £1m mark (although he received a total of almost £3m last year with perks included), so it may well have been a sensible move not to wave this particular red flag in front of investors just now.
The firm promised to ‘review’ pay policies, although what exactly such a commitment amounts to is open to question. Shareholder ire seems to be directed at least as much at the unchanged £2.5m to be paid to Trevor Matthews, brought in to run Aviva’s UK business last year, as it is against chief exec Moss.
Of course after recent ‘no’ votes by significant numbers of shareholders in other organisations - Barclays and Citigroup to name but two - pay is suddenly front of mind for investors everywhere.
And although the sums involved here would not impress the average bank boss, there are good reasons for Aviva’s backers to be getting the hump. Full-year results for 2011 showed pre-tax profits slumping to £87m, compared with £2.4bn in 2010, as the eurozone crisis hampered sales. Its share price has also dropped 30% over the last year, and it has reportedly called in Goldman Sachs to advise on the possible sale of its US business: a deal which would mean an exit from one of Aviva’s core markets.
Of course, pay revolts are embarrassing rather than fatal, but this is the biggest shareholder revolt so far. It has no doubt come as a shock and will probably send them back to the drawing board.