Aviva's stormy AGM: a view from the inside

An air of unease and discontent pervaded through the auditorium as I settled into my seat at the Aviva annual general meeting.

Much of the talk prior to today’s meeting held at the Barbican Centre had been around shareholder anger over executive pay, with new UK chief executive Trevor Matthews’ bonus of £45,000 for one month’s work topping the list.

And group chief executive Andrew Moss decision to turn down this year’s pay increase awarded to him by the remuneration committee following shareholders’ reaction to the company’s 2012 remuneration report did little to appease investors.

Chairman Lord Colin Sharman kicked-off proceedings confidently enough with his introduction, followed up with a speech by Moss on the company’s performance and a promotional video.

But by the time remuneration committee chairman Scott Wheway had got on to the thorny issue of directors pay the tone had been set.

One shareholder after another took to the microphone to vent their fury and disgust at the board at the way their company was being run and the lack of value they got in return.

The first investor aired his grievances and those shared by many in the audience, detailing the shortcomings of the company during Sharman and Moss’ tenure between 2007 and 2011, including:

• A 19% drop in global revenue and a 15% decline in group profit before tax.
• A 21% fall in dividend value
• A 62% decline in share price

“What has grown during your five years?” he questioned Sharman and his board.

“Total non-executive directors’ remuneration has ballooned between 2007 and 2011.

“The 5 non-executive directors who have been alongside both you Lord Sharman and you Mr Moss over the 5-year period have seen their personal remuneration grow by 44% and that was after 30% was awarded in 2006.

“This suggests Lord Sharman that board members have been rather more concerned about their remuneration packages than growing our business.”

Spurred on by regular rounds of applause from the audience, the shareholder went on to criticise the board’s failure to grow a sustainable business and raised concerns over the company’s plans to sell its US arm.

“It might be an idea that you Lord Sharman are not the only Aviva director attending his or her last AGM,” he added.

He continued: “Our company only needs directors who can actually deliver prosperity and peace of mind as opposed to merely talking about it and reducing it to a piece of corporate claptrap.”

His suggestion that each of the 5 non-executive directors stand up and justify their competency to shareholders didn’t go down too well with a stone-faced board and Sharman who rejected the idea out of hand.

A second disgruntled investor took up the baton, questioning the wisdom of letting Aviva Europe chief executive Igal Mayer go and launching a broadside at the outgoing Sharman and suggesting he took Moss with him.

“It’s my personal belief that this company and the shareholders can no longer afford either his strategy or his business wisdom,” he said.

Another commented: “1,300 Aviva employees received emails stating that their employment had ended. Why didn’t Mr Moss get his P45?”

Incoming chairman John McFarlane could only look on and contemplate the size of the task on his hands.

As the debate became more vociferous and the board more defensive, the meeting moved towards the crucial vote.

When it came to the crunch, 54% of shareholders, excluding absentitions, voted against the remuneration report – the first time an insurer’s remuneration package has been rejected by its shareholders.

Leaving the auditorium I saw a sign that summed up one shareholder’s sentiment: ‘How is your Aviva policy? Mine was crap’.