Aviva Suffers Major Shareholder Pay Revolt
Insurance firm Aviva has suffered a massive backlash over executive pay from its shareholders after 54% voted against the company's remuneration proposals.
The dissenting vote comes amid mounting shareholder determination that executives' pay packets should be aligned more closely with performance.
Aviva's shares have been hit by their exposure to troubled eurozone economies such a Italy and Spain, and are around 30% lower than they were a year ago.
While the vote is not binding, it is one of the biggest protests so far made by unhappy investors.
The proxy vote was made at the company's annual general meeting in London.
The embarrassing defeat comes despite Aviva group chief executive Andrew Moss announcing earlier in the week that he would not accept a pay increase of 4.8% this year in an attempt to mollify shareholders.
The increase would have taken his salary over the £1m mark.
Last year, Mr Moss received a total pay and perks package worth up to £5m if certain targets were met.
At the AGM, the group CEO told shareholders: "I care deeply about the Aviva share price and I'm as frustrated about it as anybody in this room.
"Yet despite the difficult external environment in Europe we have many things to celebrate and many reasons to be excited about the future."
Some 95% of shareholders at the meeting voted to re-elect Mr Moss as chief executive.
The company, which is Britain's second biggest insurer, has also opened a review into generous recruitment offers for senior executives in further hope of appeasing investors.
But the investor organisation PIRC had urged its members to vote against the remuneration report at the AGM on the grounds that its pay rewards were "excessive" and did not match the company's performance.
Following the rebellion, the group's managing director Alan MacDougall told Sky News: "Its share price performance has been torrid over the last year or two.
"In the wake of the announcement last week that we are officially in recession, a lot of private shareholders decided that enough was enough."
In his AGM address, Aviva chairman Lord Sharman defended the company's performance over the past year.
He said: "2011 continued to be as turbulent a year as 2010 with the political and economic agenda being dominated by concerns over the eurozone and volatile market conditions.
"Despite these challenges, and by focusing on our strategy and serving our customers well, I am pleased to report that Aviva continues to perform strongly.
"The company beat operating targets and increased profitability with full year operating profit of £2.5bn, up 6% on a continuing basis."
Barclays boss Bob Diamond faced a major revolt last week, with 26.9% of investors voting against his £25m pay package for 2011 at the bank's AGM.
In Aviva's case, the remuneration report would have been thrown out completely had new measures to give shareholders binding votes, as put forward by Business Secretary Vince Cable and backed by investor groups including the Association of British Insurers, been brought into effect.