Access the Editor’s Digest at no cost
Roula Khalaf, the Editor of the FT, curates her top stories in this weekly newsletter.
A prominent advisory firm has advised Direct Line shareholders to oppose bonus payments amounting to 300% of base salary, increasing attention on the company’s compensation practices as it prepares for a takeover by Aviva.
Institutional Shareholder Services recommended that shareholders reject the long-term incentive plan awards, which could grant CEO Adam Winslow approximately £2.55 million and CFO Jane Poole about £1.71 million. To earn the full bonuses, the executives must meet certain performance criteria.
These bonuses represent the highest level allowed under the corporate compensation policy and were proposed last summer, shortly after Direct Line resisted a takeover attempt from Belgian insurer Ageas.
However, the directors’ compensation was decided prior to Direct Line’s agreement to sell to Aviva, with the acquisition now pending regulatory approval. Completion of the deal is anticipated by mid-year, according to the companies.
In last month’s annual report, Direct Line’s board confirmed the bonuses would be issued as planned, asserting that the incentive mechanisms “must function effectively in all circumstances.”
Shareholders will have the opportunity to vote on the bonuses during the company’s annual meeting on May 14.
ISS raised concerns about the relevance of these compensation packages after Aviva’s successful bid for Direct Line, pointing out that discussions with investors regarding the bonuses were abruptly shortened by the Aviva offer. The advisory firm also mentioned that earlier bonus awards from 2021 had been forfeited due to poor performance.
Direct Line stated that one of the objectives of these bonuses is to retain talent. Winslow, who previously led the UK and Ireland general insurance unit at Aviva, is expected to leave his position after the deal is finalized, according to sources.
Aviva’s £3.7 billion acquisition of Direct Line represents one of the most significant consolidation activities in the UK insurance industry in recent years, as the sector grapples with increasing cost pressures and regulatory oversight.
The all-cash offer, finalized in December 2024 after extensive speculation, is expected to allow Aviva to control over 20% of the UK’s motor insurance market.
Recently, Ageas revealed a £1.3 billion agreement to acquire rival Esure from private equity firm Bain Capital.
