Stock Up 4% as FTSE Boss Steps Down

LONDON -- The Aviva (NYS: AV) boss is the latest in the line of U.K. bosses to jump or get pushed over excessive pay.

Whether your view is "about time!" or you see it as a worrying trend of the departure of top talent from U.K. PLCs may depend where you're coming from. As a private investor, there's more of me in the former camp than the latter. But life isn't that simple.

Of course, Andrew Moss, whose departure was announced on Tuesday wasn't worth about 600 pounds for every hour he worked for Aviva and its owners. And in reality, his remuneration is far higher due to stock awards. But as shareholders, we also want excellent performance to be well-rewarded so that we have the right people in the right jobs.

So the big strategic decisions and the ability to see them through are what really count. And the market's perception seems to be that Moss wasn't the right man for the job. The shares are up by 4% at the time of writing, making Aviva the FTSE 100's (INDEX: ^FTSE) biggest riser by some distance.

Performance over pay
As shareholders, our opinions are, and should be, based much more on performance than pay level. During Andrew Moss's nearly five years at the helm, the world has been through some turbulent economic times, to say the least. The financial crisis hammered Aviva, whose life-insurance business is highly dependent on investment income. Consequently, the share price has declined by 60% during Moss's tenure. But this isn't the Premier League; it's real life, and there's a lot more to it than the share price alone.

Aviva has done a lot of things right in recent years, deleveraging and reorganizing its businesses while increasing business in the markets where it sees the most potential. It still wasn't enough to see off last week's revolt by institutional shareholders when the majority refused to back the company's pay policies. This is a rare event. It's only the fourth such revolt at an FTSE 100 company. But they did back Moss personally, with 95% voting to re-elect him as CEO.

The revolts over remuneration are increasing, as may be expected in difficult times. Just last month, 27% of Barclays (NYS: BCS) shareholders voted against its remuneration report.

For Aviva, it isn't fundamental to the value case. But if it helps CEOs get the message that it's all about performance for the company's owners, it has to be a good thing.

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At the time this article was published David owns shares in Aviva and Barclays. The Motley Fool has adisclosure policy.
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