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An influential proxy adviser has told Direct Line investors to vote against bonus awards worth 300 per cent of base salary, placing the insurer’s pay practices under renewed scrutiny ahead of its expected takeover by Aviva.
Institutional Shareholder Services said that investors should reject long-term incentive plan awards, which could hand chief executive Adam Winslow roughly £2.55mn and chief financial officer Jane Poole £1.71mn. The executives have to satisfy performance conditions to receive the full amount of the awards.
The bonuses — which are the maximum level permitted under the company’s remuneration policy — were first proposed last summer, after Direct Line had fended off a takeover bid from Belgian insurer Ageas.
However, directors’ pay packages were determined before Direct Line agreed a sale to Aviva, a deal that is now awaiting regulatory approval. The acquisition is expected to be completed by mid-year, the companies have said.
In its annual report last month, Direct Line’s board said the bonuses would be granted as planned, adding that the incentive packages “must operate effectively in all scenarios”.
Shareholders will vote on the bonuses at the company’s annual meeting on May 14.
ISS questioned whether the pay packages were still relevant following Aviva’s successful takeover bid, and noted that consultation with investors on the awards was cut short by the Aviva approach. Earlier bonus awards from 2021 were forfeited due to underperformance, ISS also noted.
Direct Line has said that one of the purposes of the bonuses is talent retention. Winslow, who joined the group from Aviva, where he led the UK and Ireland general insurance unit, is widely expected to step down following the completion of the deal, said people familiar with the matter.
Aviva’s £3.7bn takeover of Direct Line marks one of the UK insurance sector’s most significant consolidation deals in recent years, as the industry responds to mounting cost pressures and regulatory scrutiny.
The all-cash offer, agreed in December 2024 after months of speculation, is expected to give Aviva more than a fifth of the UK’s motor insurance market.
Last week, Ageas announced a £1.3bn deal to buy rival Esure from private equity group Bain Capital.
