Shareholders back Aviva pay one year after revolt

LONDON Thu May 9, 2013 11:39am EDT

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LONDON May 9 (Reuters) - Investors in British insurer Aviva have backed the firm's new management team one year after a vote against executive pay plans that led to the departure of its chief executive.

An early count of proxy votes at the company's annual shareholder meeting indicated a return to previous practice, with institutional investors driving an 88 percent vote in favour of the company's latest pay plans.

Last year shareholders representing 50 percent of the company's shares rejected management proposals, part of a broader revolt against big rewards for directors at British and European companies in tough economic times.

In response, management agreed in this year's round to freeze salaries at last year's levels and shied away from awarding bonuses for 2012 to directors.

At the meeting in London's Barbican Centre they still faced the sort of hostile questioning which often marks annual public meetings, the only regular forum for shareholders to question managers.

Private investor Philip Meadowcroft said the pay concessions did not go far enough and suggested bonuses be withheld until Aviva shares triple from current levels of 320 pence.

"Bonuses are for stellar achievements, not merely for turning up for work," he told the board to applause. "You and your colleagues are a million miles away from any sort of stellar achievement meriting any bonuses."

Shareholders at the meeting were also angered by a recent move to slash the dividend by more than a quarter in order to divert cash towards repaying debts.

One frustrated audience member mounted the stage to unfurl a banner that read "Aviva are crap" before he was ushered back to his seat by stewards.

"I can assure you that we explored every option before we decided to reduce the dividend," Wilson said in his first address to shareholders since taking the reins at the start of this year.

New Zealand born Wilson, former boss of Asian rival AIA Group Ltd, is being paid a base salary of 980,000 pounds, according to Aviva's annual report. His chief financial officer, Patrick Regan, gets 720,000, 27 times the UK's average annual salary.

He takes over the firm in the middle of a root-and-branch revamp after years of spiralling costs and disappointing share price performance.

Chairman John McFarlane sought to appease angry investors with a comprehensive strategic review last July, which called for the sale or closure of more than a dozen underperforming and non-core business units.

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