Pru drops executive bonus package

Prudential recently announced strong sales growth

The insurance company Prudential has withdrawn a controversial executive share scheme in a bid to head off a shareholder revolt at its annual meeting.

Analysts said the deal could have earned Prudential's chief executive Jonathan Bloomer up to £4.6m in bonuses over four years, on top of his salary and other incentives, if performance targets were met.

But shareholders had expressed disquiet that the terms of the deal would mean executives would receive bonuses even for poor performance.

Faced with the prospect of shareholders voting against the package at Thursday's AGM, the Prudential has now withdrawn it.

'Speculation'

Each executive director stood to earn bonuses of £600,000 simply for meeting average goals, one analyst said.

However, a spokeswoman for the Pru refused to confirm the amounts, saying: "This is just people speculating with calculators."

She said there had been a number of last-minute queries from institutional investors about the deal.

But she added that proxy votes counted ahead of the meeting would have agreed the deal.

Last month the Association of British Insurers, the industry lobby group, declared itself happy with the Prudential share options package and backed management, the spokeswoman said.

Complaints

But it recently called on the company to address the last-minute institutional queries and complaints.

Prudential recently posted a healthy 35% rise in insurance and investment sales, which included record insurance sales of £1.8bn in the UK.

New sales of pensions and savings products jumped to £806m across the group, up from £642m in the same period last year.

However its chairman, Sir Roger Hurn, stepped down last month following criticism of his former involvement in struggling telecoms firm Marconi.

Sir Roger was chairman of Marconi until September 2001, when he resigned after the company announced a first quarter operating loss of £227m, leading to a nose-dive in its stock market value and the loss of thousands of jobs.