Prudential fights off shareholder rebellion on pay

INSURANCE giant Prudential defused a shareholder rebellion on pay at yesterday’s annual general meeting, but directors had to suffer being accused of corporate greed from the floor.

Tidjane Thiam. Picture: PA

Nearly 12 per cent of voting shareholders rejected Prudential’s remuneration report for last year, which hiked executive directors’ total pay packages 12 per cent to £33 million. A total of 12.9 per cent voted against the company’s plans for for a new long-term shares bonus plan.

The boardroom largesse came despite the company being fined £30m by the Financial Services Authority recently, and chief executive Tidjane Thiam, pictured below, publicly censured, for failing to keep the regulator informed on a major, eventually abortive, Asian acquisition.

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Only 2 per cent of shareholders voted against Thiam’s re-election as a director, the chief executive’s pay jumping 65 per cent to £7.8m in 2012.

Yesterday’s rebellion was well down on the 30 per cent “no” vote on pay last year and follows the insurer’s 25 per cent rise in annual earnings to £2.5 billion last year.

However, some individual shareholders lined up to criticise the company’s remuneration. One said: “This is an obscene record of remuneration.”

Another complained that directors’ pay amounted to 4 per cent of shareholders’ rewards. He said: “I’ve not doubt that that everybody works very hard but the word greedy is not remote from my mind”.

Chairman Paul Manduca said directors’ remuneration needed to be looked at in the light of shareholder rewards, which last year included a 16 per cent lift in the dividend.

The Pru’s shares closed up 2p at 1,183p yesterday – compared with 640p in January 2010 when the last long-term incentive arrangements for directors were put in place.

“We expect management to do well when shareholders do well,” Manduca said. “The executive remuneration is relatively high and the larger part of our remuneration is driven by long-term incentives.”

In March the FSA fined the Pru for not telling it about its 2010 bid for AIG’s Asian subsidiary AIA. The regulator, which has now been disbanded, said the deal, worth £23 billion, had the potential to hit the “stability and confidence of the financial system in the UK and abroad” if it went wrong.

The Pru has already said it “regret(s), with hindsight” not informing the FSA. But Manduca stopped short of apologising to investors for the fine, and stressed that Thiam “acted at all times in the interests of the company and in the full knowledge of the board”.

He added: “We wish to draw a line under the matter and ensure that our relationship with regulators remains good.”

The 165-year-old company enjoyed a record 2012 in Asia as it taps into the continent’s emerging middle-class. It has about 13 million customers in Asia, compared with seven million in the UK.