Aviva boss is ousted with £6m in pay and ben­e­fits

The Aviva boss had man­aged to of­fend the City not once but twice and that proved to be his un­do­ing de­spite the group’s turn­around

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton and La­Toya Hard­ing

THE boss of FTSE 100 in­surer Aviva will pick up £6m in pay and ben­e­fits after be­ing abruptly ousted by the board.

Mark Wil­son, who once claimed he had in­her­ited a lazy “couch potato” when he took on the top job in 2013, was in­formed of the de­ci­sion on Mon­day on what sources de­scribed as a “dif­fi­cult day”.

Sir Adrian Mon­tague, cur­rently nonex­ec­u­tive chair­man, will as­sume ex­ec­u­tive re­spon­si­bil­i­ties un­til a suc­ces­sor is found. A per­son close to the board’s think­ing said they wanted some­one in­side the in­sur­ance sec­tor.

Sir Adrian said that Mr Wil­son was leav­ing the com­pany, which pro­vides life in­sur­ance, gen­eral in­sur­ance, health in­sur­ance and as­set man­age­ment to 33m cus­tomers, in a stronger state than when he joined.

“We have agreed with Mark this is the right time for a new leader to en­sure Aviva de­liv­ers to its full po­ten­tial,” he said.

Mr Wil­son’s exit comes months after in­vestors were left fu­ri­ous with Aviva over a plan to can­cel £450m of so­called pref­er­ence shares, which tum­bled on the an­nounce­ment and led to a pa­per loss of around £1bn for in­vestors. Aviva later re­versed its de­ci­sion.

Mr Wil­son also took up a board seat at ri­val fund man­age­ment gi­ant Black­Rock, fur­ther an­ger­ing some in the City who saw it as a con­flict of in­ter­est.

The de­ci­sion to re­place him is un­der­stood to have fol­lowed months of dis­cus­sions, but one source in­sisted his exit was un­re­lated.

The in­surer said the search for a new boss was ex­pected to be com­pleted within the next four months. New Zealand-born Mr Wil­son will ad­vise the firm un­til April next year. Aviva’s share price hardly moved yes­ter­day at 464p.

‘His at­tempt to wipe out £450m of pref­er­ence shares at par value was ill-judged’

Avi­vaderci then to Mark Wil­son, the man who said he had whipped the “couch potato” for­merly best known as Nor­wich Union into shape.

As is usu­ally the case when a big name boss gets the boot, there was shock but not sur­prise in the City yes­ter­day.

Wil­son is the 18th FTSE 100 chief ex­ec­u­tive to exit in the past year. That should not be a huge sur­prise ei­ther. The aver­age ten­ure for the head of a big listed com­pany in Bri­tain is about five years, so we should re­ally ex­pect to bid farewell to 20 of them ev­ery 12 months.

Wil­son prob­a­bly should have seen it com­ing him­self be­fore Mon­day’s board meet­ing but ap­par­ently did not. In his fi­nal months in charge of Aviva he man­aged to of­fend the Square Mile not once but twice.

Re­mark­ably, his de­ci­sion to ac­cept a po­si­tion on the board of gi­ant Amer­i­can fund man­ager Black­Rock was the lesser of his re­cent mis­steps. The up­per ranks of cor­po­rate Bri­tain are riven with con­flicts of in­ter­est, which can some­times be well man­aged, but this was par­tic­u­larly con­cern­ing for Aviva share­hold­ers.

The in­surer’s own in­vest­ment arm com­petes di­rectly with Black­Rock for money and tal­ent. Wil­son and the Aviva board, led by chair­man Sir Adrian Mon­tague, must have known that this might not be a pop­u­lar move yet went ahead with it.

Share­hold­ers might nev­er­the­less have turned the other cheek had they not al­ready been in outcry over Wil­son’s other spring­time ma­noeu­vre.

The Aviva board has ru­mi­nated on his fu­ture for the last cou­ple of months but Wil­son’s days were num­bered as soon as he pro­posed the can­cel­la­tion of the “ir­re­deemable” shares back in March. His at­tempt to wipe out £450m of pref­er­ence shares at par value was disas­trously ill-judged.

It sparked anger in the City and in West­min­ster, and drew an in­ves­ti­ga­tion from the Fi­nan­cial Con­duct Au­thor­ity. Aviva was forced to back down and come up with a £14m good­will pay­ment for pref­er­ence share­hold­ers who had seen the value of their in­vest­ments trashed by the com­pany’s mis­taken tac­tics. Wil­son will now get al­most half that as an exit pack­age.

Fund man­agers will tol­er­ate most cor­po­rate ex­cesses. How­ever, as Unilever’s man­age­ment and di­rec­tors have re­cently dis­cov­ered, if you try to force them to sell shares at a time and price not of their own choos­ing, they re­ally don’t like it.

Un­like Mar­ijn Dekkers at Unilever, Aviva’s chair­man has at least ac­knowl­edged the mis­take and be­gun the search for new ex­ec­u­tive lead­er­ship. A show of hu­mil­ity from Mon­tague in meet­ings with share­hold­ers in re­cent weeks means he is not so dam­aged and will be backed to se­lect a suc­ces­sor.

Aviva was ready for a new broom any­way. Wil­son was the right sort of chief ex­ec­u­tive when he ar­rived in 2013. He was hands-on and a mas­ter of de­tail as he fixed its bal­ance sheet, sold off some in­ter­na­tional busi­ness and ex­panded do­mes­ti­cally with the £5.6bn takeover of Friends Life.

That proved to be a high point of the Wil­son era, how­ever, and Aviva has since strug­gled to set out a per­sua­sive vi­sion. He might still have been able to step down at a time of his own choos­ing if he had been able to set out a growth plan that the mar­ket could get be­hind.

Wil­son’s procla­ma­tion last year that “we want to turn Aviva into a fin­tech” came across as lack­ing in sub­stance. “I don’t know how big a lot of this stuff can get but we think it can get pretty big pretty quickly,” he said, not to­tally con­vinc­ingly.

Aviva’s Bri­tish fo­cus hasn’t helped the shares since the Brexit ref­er­en­dum, but its main prob­lem is a lack a proper long-term plan. Ri­vals are mean­while re­shap­ing the in­sur­ance sec­tor with rad­i­cal deal­mak­ing that is cre­at­ing a mar­ket of global gi­ants at one end and spe­cial­ists at the other. Aviva is nei­ther.

Wil­son’s suc­ces­sor will need big ideas and back­ing from the board to ex­e­cute them if Aviva is to avoid hav­ing its fate de­cided by the com­pe­ti­tion.

The old file on a po­ten­tial merger be­tween the UK busi­nesses of Pru­den­tial and Aviva is bound to be dusted off. The two are closer to a match than when it was last tried in earnest more than a decade ago. Pru­den­tial has taken the rad­i­cal step of split­ting off its faster­grow­ing in­ter­na­tional busi­ness. Aviva will prob­a­bly face re­newed pres­sure to look at a sim­i­lar move.

Mon­tague is keen to find a new chief ex­ec­u­tive with a strong fo­cus on Aviva’s cus­tomers and prod­ucts, which would sug­gest the board is not nec­es­sar­ily keen to sell up.

The in­ter­nal can­di­dates Andy Briggs and Mau­rice Tul­loch are both well-liked by the board but per­haps Aviva would ben­e­fit from fresher eyes. Dame Inga Beale, the now ex-chief ex­ec­u­tive of Lloyd’s of Lon­don, says she wants “an­other big role” and will surely be on the head­hunters’ list.

Wil­son de­liv­ered the turn­around Aviva needed, it is just not clear in which di­rec­tion the in­surer is now pointed. He suc­cess­fully ban­ished the couch potato but re­placed it with one that was half-baked.

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