Moss scythed

Andrew Moss has chalked up a dubious achievement. On Tuesday, Aviva’s chief executive became the first explicit victim of the “shareholder spring” sweeping corporate boardrooms. Last week’s investor revolt over the insurer’s pay plan was the lightning rod for broader and deeper dissatisfaction. Nevertheless, his departure raises the stakes for future uprisings — for both CEOs and investors.

Moss’s departure is hardly a bolt from the blue. Aviva shareholders were unhappy long before the company’s board proposed giving the CEO a 4.8 per cent pay rise and handed incoming UK chief Trevor Matthews shares with a value of £2 million. The dissatisfaction was spurred by a 2009 dividend cut, strategic shifts and share price underperformance. Even after a 3.5 per cent bounce prompted by the news of Moss’s departure, Aviva shares have lost almost 30 per cent of their value in the past 12 months.

Aviva’s pay plan proved the flashpoint. A majority of shareholders at last week’s annual general meeting withheld their support for the company’s remuneration report, even after Moss offered to give up his salary increase. Opposition on such a scale proved impossible to ignore.

Moss’s ousting sends a clear signal to chief executives, particularly those of underperforming companies, not to give shareholders a reason to mount a protest. That should help to rein in excessive pay awards.

However, Moss’s departure also ups the ante for investors. Though votes are a good way of expressing dissatisfaction, they don’t necessarily give companies many clues about what shareholders would actually like. At the same AGM, shareholders holding just 2.5 per cent of the company’s stock withheld their support for Moss’s re-election. Yet two of the company’s largest investors — as usual, hiding behind the cloak of anonymity — subsequently told the Sunday Telegraph that the pay revolt was aimed at Moss.

Not all shareholder revolts are terminal for CEOs. Just look at Tidjane Thiam, who continues to lead rival insurer Prudential even after investors refused to support his proposed takeover of Asian rival AIA. But robust expressions of shareholder democracy, however welcome, are hardly ideal for transmitting nuanced messages.