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 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.