By Agencies

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The head of Britain's second-biggest insurance group Aviva has stepped down, as shareholders continue to pressure the company to tackle overpay for top managers perceived as underperforming.

Aviva said on Tuesday that Andrew Moss, the corporation's chief executive, was leaving the company immediately after five years at the helm.

Top British companies, and some firms abroad, are facing a wave of investor activism as shareholders rebel over high boardroom pay amid underperformance in the poor economic climate and moves by the state to clamp down on corporate greed.

"Aviva plc announces that Andrew Moss, chief executive officer (CEO), will be leaving the group and will cease to be chief executive with immediate effect," the insurer said in a surprising announcement on Tuesday.

Aviva said that John McFarlane, its incoming chairman, would assume executive duties with immediate effect. He will be tasked with helping to find a new CEO.

Shareholders' respect

"My first priorities are to regain the respect of our shareholders by eliminating the discount in our share price and to find internally or externally the very best leader to be our future CEO," McFarlane said in a statement.

"I will meet all of the major investors over the coming days and weeks."

Investors hailed the boardroom shake-up as Aviva's share price went up 2.88 per cent to 311 pence in afternoon trading on London's benchmark FTSE 100 index, which was down 0.29 per cent at 5,637.65 points.

Last week saw 54 per cent of its Aviva's shareholders vote against its remuneration report.

Including abstentions, almost 59 per cent of investors refused to endorse the group's executive pay policy, in a result announced at Aviva's annual general meeting in London on Thursday.

The rejection vote was non-binding but nevertheless a major embarrassment for Aviva, Britain's second-biggest insurance company after Prudential.

Aviva's defeat came despite Moss bowing to investor pressure and waiving a pay rise that would have taken his salary above $1.61m.

Moss was last month awarded a 4.6-per cent increase on his annual salary of £960,000 but decided to decline it.

Aviva added on Tuesday that Moss "felt it was in the best interests of the company that he step aside to make way for new leadership".

Aviva's outgoing chairman Colin Sharman nonetheless said the group "should acknowledge the progress that has been achieved under Andrew Moss's leadership.

Apology to investors

"Through the global financial crisis he led the consolidation of our international presence and the integration of 40 brands into the very powerful single Aviva brand."

Sharman last week apologised to investors for ignoring their views when setting pay.

Last week's annual general meeting took place with Aviva's share price, which has been hit by its exposure to debt-plagued eurozone economies, standing almost 30 per cent lower compared with one year earlier.

At the start of the year, the British government unveiled proposals that may result in shareholders holding binding votes over executive pay and the creation of more diverse boards and remuneration committees.

"The government's campaign ... has undoubtedly triggered more activism from shareholders but recent events show that shareholders already have the power to change things," Barty added in a statement on Tuesday.

Moss's departure meanwhile comes after British newspaper publisher Trinity Mirror last week said that its chief executive Sly Bailey would step down amid a looming shareholder revolt over her pay package.

And the chief executive of Anglo-Swedish pharmaceutical group AstraZeneca, David Brennan, recently announced his retirement amid investor concerns over his stewardship of the group.

At Barclays, the British bank, almost one third of its shareholders chose not to back its executive pay awards late last month amid controversy over chief executive Bob Diamond's hefty wage package.

Also in April, Citigroup shareholders rejected the board's compensation plan for the US bank's top five executives.

"The events at Aviva, AstraZeneca and Barclays shows that when shareholders flex their muscles boards have to respond," said James Barty, senior adviser on financial policy at the Policy Exchange think-tank.