Pressure mounts ahead of rough AGM for Prudential

Published on Sunday 6 June 2010 21:46

Chief executive Tidjane Thiam is under pressure over AIA

INSTITUTIONAL shareholders have cranked up the pressure on the embattled Prudential board by voting against some executive pay packages ahead of what is set to be a rough shareholder AGM today.

The action of Aviva Investors, Schroders and Co-operative Asset Management will intensify shareholder disquiet, with attacks expected on the board over its failed $35 billion (24.2bn) acquisition of AIG's Asian business, AIA.

That reversal, when the insurer failed to get AIG to renegotiate the price, has put severe pressure on Prudential chief executive Tidjane Thiam and chairman Harvey McGrath in particular, with some suggesting they should quit.

Aviva, Schroders and Co-operative Investments have voted against the Pru's remuneration report, mainly because they are unhappy at "golden hello" payments made to two new executives last year.

They were Nic Nicandrou, the finance director, and Rob Devey, head of the Pru's UK business.

One source said: "The institutions involved are not keen in golden hello payments as a matter of principle.

"Signing-on incentives tend to escalate in the market place and gather a momentum of their own.

"On top of that, it can sometimes be a case that the quantum is of concern."

Nicandrou got a basic salary of 550,000 and bonuses worth nearly 2 million when he joined the firm last year from Aviva, Thiam's former employer until a couple years ago.

Devey, a former insurance executive with HBOS is believed to be on a similar package.

Schroders, Co-operative Asset Management and Aviva Investors are all top-20 shareholders in the Pru.

A Co-operative spokesman said at the weekend: "We will not tolerate awards that undermine the nature of long-term performance awards – golden hello payments are an example of this."

Meanwhile, the Pru rejected a report yesterday that it might try to revive its bid for AIG Asia later this year.

A spokesman said: "We will not be resurrecting the AIA deal, and any speculation is misguided and inaccurate."