Harvey McGrath counts cost of Pru's botched bid

 

Bungling prudential chairman Harvey McGrath was fighting for his job last night after furious investors called for his head.

Harvey McGrath

Lack of faith: Harvey McGrath

More than a fifth of shareholders voted against his reelection at the insurance giant's annual meeting in central London and another 5% sat on their hands.

It left just 73% in favour of McGrath keeping his job in one of the biggest revolts against a FTSE 100 company chairman for years.

The damaging vote of no confidence - far bigger than expected by the company - followed the Pru's botched £22bn takeover of Hong-Kong based rival AIA last year.

The collapse of the deal, which would have doubled Prudential's presence in fastgrowing Asia, cost the company £377m in advisers' fees and prompted calls for McGrath and chief executive Tidjane Thiam to quit.

A robust performance since the AIA deal fell through last June has helped redeem Thiam but McGrath remains under pressure.

Although the dissenting vote was not enough to unseat the chairman, City experts said the size of the rebellion cast doubt over his long-term future.

'I think it means he must walk in due course,' said one analyst, who did not want to be named. McGrath put on a brave face after the vote.

'The chairman becomes a lightning rod for shareholder issues and that is what was reflected in the voting,' he said. 'I do not think there are areas of dispute. It is a question of continuing the level of engagement we have had over the last six to nine months.'

But sources close to McGrath conceded that 'time will ultimately tell' whether he can keep his job.

Pension fund Fidelity led the revolt against McGrath which saw 22pc of voters oppose his re-election. One private shareholder at yesterday's meeting called for an apology and a change of management while another said the AIA bid was 'ill-planned and shambolic'.

However, the AGM was less stormy than last year's meeting which came just days after the AIA deal was called off.

'Can I have your reassurance that we are going to go back to being boring?' asked private investor Michael Self, a Pru shareholder for 50 years.

The re-election of Thiam, who took his 2010 bonus of £1.57m in shares rather than cash in the wake of the AIA debacle, won the backing of more than 99pc of investors.

Pru shares, which fell steeply after the AIA bid was announced, have risen by a third since it fell through and were up 11.5p to 740p yesterday.