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John McFarlane, the incoming chairman of Aviva PLC (AV.LN), is scheduled to begin meeting the U.K. insurer's top shareholders even before his term officially starts in his role, in a move that could help improve ties after investors rejected the company's 2011 pay report in Thursday's annual meeting.
"John McFarlane will start meeting institutional shareholders before he becomes chairman on July 1...It's likely for them to discuss growth strategy and compensation to executives since that has been a very important topic recently," a person familiar with the situation told Dow Jones Newswires.
McFarlane, who will take over the post from Colin Sharman, is expected to meet "all of Aviva's major shareholders over a number of weeks," the person said without saying exactly how many will be met over what period of time.
The planned meetings come after 54% of votes cast in the AGM were in opposition to Aviva's remuneration report.
The rebuke on its executive pay policy comes amid an increasing and more vociferous backlash against what many consider excessive executive pay in the financial sector, as investors find it hard to accept rising salaries and bonuses in the face of declining share prices.
The nonbinding vote makes Aviva only the fourth FTSE 100 company in U.K. corporate history to have its pay report rejected, after similar defeats in previous years by Royal Bank of Scotland Group PLC (RBS.LN), GlaxoSmithKline PLC (GSK.LN) and Royal Dutch Shell PLC (RDSA.LN).
One angry shareholder at the AGM complained about the 60% fall in share price since a peak in 2007 and asked Chief Executive Andrew Moss and members of the remuneration committee to resign.
Over the past year, Aviva shares have fallen some 32%.
Chairman Sharman then said: "I'm a shareholder, and I'm also not happy about the share price...But let's not forget that since then, we were also affected by the global financial crisis and the current European sovereign debt crisis. I can't take responsibility for those."
A spokesman for one of Aviva's top 20 investors told Dow Jones Newswires: "We look forward to the new chairman meeting us face-to-face."
He said the vote Thursday is "more a reflection of the share-price movement over the last 12-18 months than anything else."
"The role of the new chairman is to canvass opinion among shareholders on executive pay, among other things. This is our opportunity to speak with him," he said, adding that his firm wants to see the chairman "have a more active role in remuneration."
"Good companies keep their shareholders close. Regular meetings and open dialogue are what's needed," he said.
During the AGM, Scott Wheway, head of Aviva's remuneration committee, said: "I would like to apologize to any shareholder that feels their views have not been adequately represented in the decisions we have made."
Wheway said his committee will talk to shareholders about changes in pay policy, including bonuses and pay being given when recruiting new executives.
He also indicated that even retail shareholders may have their voices heard. "It is indeed easier to talk to larger institutional investors one by one, but we will try to make sure there are feedback mechanisms so that every voice is heard," he said.
At 1300 GMT, Aviva shares were down 1.6% at 306 pence, while the FTSE 100 index was down 1.1%.
- By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0) 2078429486, email@example.com