Insurer unveils new leader
Aviva promotes Tulloch to replace Wilson as CEO
Sir Adrian Montague, Chairman of Aviva, who has been acting in an executive capacity pending the appointment of a CEO, will revert to his role as non-executive chairman.
Mr Tulloch, who hails from Falkirk, will be paid a basic annual salary of £975,000 and will be eligible for an annual bonus paying twice that figure.
He joined Aviva in 1992 and was appointed to the board of in June 2017. He steps up from his role as chief executive, International Insurance where he had responsibility for Aviva’s life insurance and general insurance operations in France, Canada, Ireland, Italy, Poland, Turkey and India. He was previously Chief Executive Officer of Aviva UK and Ireland General Insurance, one of the largest businesses in the Aviva group.
Adrian Montague, chairman of Aviva, said: “Maurice will be an outstanding chief executive of Aviva. He knows the business inside out. He has led our businesses in the UK and internationally and built strong teams across life insurance and general insurance.
“The board has run a thorough and highly competitive process and we have interviewed external candidates alongside highly experienced and respected internal candidates. This process led to a unanimous conclusion and a great result for Aviva.”
He said: “I am honoured to lead Aviva, a business I’ve been part of for 26 years. There is a clear opportunity to realise Aviva’s significant but untapped potential. Aviva is financially strong, we have a well-known brand and excellent businesses. But there is more to do to improve returns for shareholders.
“We must focus on the fundamentals of insurance and giving our customers the best possible experience – being there when they need us, protecting what’s important to them and helping them save for the future. With the care and professionalism of our dedicated people, I know Aviva will thrive.”
On his arrival six years ago, his predecessor, took what were regarded as the painful but necessary step of slashing the dividend.
He sharpened the group’s focus, exiting a number of markets, and pulled off off a substantial deal (the £5.6bn takeover of Friends Life) that helped fix its shaky balance sheet.
But the stock market failed to credit him for his efforts. The shares rose 27% during his tenure, better than the FTSE 100, but a long way behind rival Prudential’s 94% and Legal & General’s 78%.
Russ Mould, investment director at AJ Bell said:“The decision to appoint an insider as the new chief executive of Aviva may disappoint critics hoping for someone fresh to shake up the life insurer.
“While Maurice Tulloch has the advantage of knowing the business inside out, some shareholders may have been looking for an outsider to come in with an open mind on how the business should really be run.
“Tulloch will be immediately under pressure to reduce gearing levels (debt) and that could mean less generous dividend growth or lower share buybacks in the future if there are more pressing demands on cash.
“He will also have to address criticisms about Aviva’s perceived lack of earnings growth. Yet even that may have to take a backseat until the new boss has right-sized the business for the future, with asset sales no doubt on the agenda.
“Aviva has significantly lagged its peers on the stock market meaning Tulloch has his work cut out in terms of pacifying shareholders, getting the business in better shape and carving out a path for the future.”
Maurice Tulloch will receive a basic annual salary of £975,000 pro-rated for his length of service as CEO in 2019. He will be eligible to receive a pro-rated annual bonus opportunity for 2019, that will pay up to a maximum of 200% of salary for his time in role as CEO, and be required to defer two thirds of any award made into Aviva stock which will vest in three equal tranches over three years.
Mr Tulloch will also be eligible to receive the grant of an award under Aviva’s Long-Term Incentive Plan for 2019 under which awards are made annually at the discretion of the Remuneration Committee. Long-Term Incentive Plan awards for the Group Chief Executive are typically 300% of basic salary with awards vesting after three years and only if specific financial and shareholder return targets are met.
There is a further two year holding period for the awards after vesting. Long-Term Incentive Plan awards for 2019 will be reported on 26th March in line with our usual timetable.
Mr Tulloch currently owns 348,797 shares in Aviva plc and will be required to build a shareholding in Aviva to the value of 300% of his basic salary. He will be required to retain 50% of the net share releases from his deferred bonus and long-term incentive awards until this requirement is met.
He will receive pension contributions of 14% of salary in line with the maximum employer contribution level available to all UK based employees. This follows the latest guidance from the Investment Association.
In addition, he will receive the standard Aviva executive benefits package. This will include assistance with relocation from Canada to the UK of an amount up to £250,000 exclusive of tax, payable against receipted costs incurred within a period of 24 months from the date of appointment.