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Pru faces backlash over Thiam bonus

By Simon Duke for MailOnline
Updated: 03:47 EDT, 1 April 2011

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Prudential risks provoking the ire of its shareholders after the insurer handed the architect of its bungled takeover of an Asian rival a pay package of nearly £5m last year.

In the money: Boss Thiam enjoyed a big payday despite the doomed AIA bid

Despite losing almost £400m on the collapsed AIA deal, chief executive Tidjane Thiam scooped a bonus of £1.6m, according to the Pru's annual report.

Including his £900,000 salary, a £2.1m windfall from a previous incentive scheme and other perks, Thiam banked £4.8m for his efforts in 2010.

The chief executive also received a share award worth £3.6m, which he'll be able to collect in three years' time if he hits all of his performance targets.

One pressure group said the Pru would have to work hard to 'convince' investors that the rewards were merited less than a year after spending £377m on its doomed pursuit of AIA.

Other executives were paid equally lavish sums. Michael McLintock, the head of the Pru's fund management wing M&G, pocketed £2.1m, including a £1.6m bonus.

And a £2.2m package for Asia boss Barry Stowe included a £153,384 housing allowance, a £47,639 stipend to put his children through school and a further £42,509 to cover executive class flights back to his native US.

Bridget Macaskill, the head of the group's pay committee, insisted that the AIA losses had been 'fully taken into account' when calculating boardroom bonuses.

She pointed out that Thiam has waived his right to receive half of his annual bonus in cash. Instead, all of his £1.6m pay-out for 2010 will be in shares, which he won't be able to touch for three years.

But investor lobby group PIRC said it would need 'some convincing that bonus awards significantly higher than those for 2009 are justified' given the mammoth cost of the botched AIA deal.

'Simply converting this (windfall for Thiam) into a shareholding does not automatically make it acceptable,' it added.

One large shareholder, who wanted either Thiam or chairman Harvey McGrath to fall on his sword last summer, said the Pru's strong performance last year underlined the folly of the AIA approach.

The institutional investor told the Mail: 'The business is in good shape and they had a successful year, so they did not need to go after AIA.'

Booming sales of investment and savings products in Asia lifted operating profits by a quarter to £1.9bn in 2010, allowing the Pru (down 15p to 707p) to raise its dividend by 20%.

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