The chief executive of insurance company Aviva has stepped down following a revolt which saw 59 per cent of shareholders vote against the pay report for executive staff.
Aviva says Andrew Moss "felt it was in the best interests of the company that he step aside". The chairman designate, John McFarlane, will take over at Aviva until a new CEO is found.
The company's share price has fallen by 60 per cent since Moss became CEO in 2007, and it was this, rather than the pay report, which McFarlane stressed in his incoming statement, saying:
I feel I can make a real difference. My first priorities are to regain the respect of our shareholders by eliminating the discount in our share price and to find internally or externally the very best leader to be our future CEO. I will meet all of the major investors over the coming days and weeks.
Until now the company has seemed flummoxed by the shareholder rebellion. The director of the pay committee said on Friday that:
We, and I personally, recognise that we can and should have done more to engage with our shareholders. . . [but that] we believe we made appropriate remuneration decisions in 2011.
The resignation of Moss is the first sign of contrition from Aviva, but it is also yet another indication that shareholder approval of pay packages, although officially merely an "advisory" measure, is in fact seen as a necessity in order for executives to retain credibility. At Trinity Mirror, following shareholder objections to her £1.7m salary, chief executive Sly Bailey resigned; Moss following suit seems to make this a trend.
As Martha Gill wrote on Friday, successful rebellions are still rare enough that being the target of one cannot go unnoticed for a chief executive. Whether Aviva and Trinity Mirror follow the lead of GlaxoSmithKline, which radically overhauled its pay policy following a shareholder rejection in 2003, remains to be seen.