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Aviva pressed to recall bonuses after share buyback debacle

Aviva pressed to recall bonuses after share buyback debacle

Investor group ShareSoc has called on Aviva to claw back bonuses paid in 2018 after the provider was censured for 'potentially misleading' the market in its share buyback saga.

In an open letter to the provider, published yesterday (January 13), ShareSoc said if Aviva was unable to recall directors’ bonuses from 2018 it should consider asking those involved to volunteer to give back the bonuses in question. 

Another way could be for Aviva to take the 2018 bonuses from any 2020 bonus awards, the investor group stated.

In the letter, Cliff Weight, director of ShareSoc, said: “ShareSoc considers that it should be possible to claw back bonuses which were not deserved. 

“The FCA fines and censure are very important and Aviva needs to advise how the organisation will address and change remuneration matters.”

Aviva declined to comment on the letter but noted that it revised down executive director bonuses at the time in 2018.

Last year (October 26), the Financial Conduct Authority publicly censured the pensions and insurance giant for failing to ensure its market updates were not misleading.

It found that Aviva had failed to consider adequately how its announcement in 2018 might be interpreted by the market, especially the holders of the shares in question.

The incident concerned preliminary year-end results from March 2018, in which Aviva said it could legally cancel nearly half a billion pounds worth of preference shares held by investors.

At the time the shares were trading at above their par value, so the statement raised concerns holders would incur losses if the shares were cancelled.

As investors took action to sell at the above par trading price, the market price for the preference shares fell between 20 and 26 per cent on the day of the announcement.

But Aviva had not decided to cancel the shares in question and the impression given by the announcement was not accurate.

Following this, ShareSoc warned Aviva that a “trivial remuneration adjustment” would not be acceptable and has also called for a cultural change at the provider.

In its Q3 statement in November, Aviva said it accepted the FCA’s decision and said it was “a disappointing episode for which we are sorry for and lessons have been learned”.

In light of the final notice, it said it was reviewing the impact on remuneration.

amy.austin@ft.com

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