Insurer RSA Braced For Revolt Over CEO Lee

By Mark Kleinman, City Editor

The FTSE-100 insurer RSA is moving to head off an investor revolt against its chief executive at next month's annual annual meeting following a swingeing cut to the company's dividend.

I have learnt that RSA board members and advisers have been reaching out to leading shareholders in recent days to try to shore up support for Simon Lee, who sparked anger earlier this year when he slashed the company's dividend.

The move highlights a growing expectation that RSA could emerge as one of the victims of another round of what was last year dubbed the "Shareholder Spring".

That wave of revolts prompted the resignations of bosses at companies including Aviva and Trinity Mirror.

RSA's broker, JP Morgan Cazenove, is understood to have enquired about some major investors' voting intentions in relation to Mr Lee's re-election at the company's AGM, which takes place in mid-May.

Such a question is unusual ahead of a blue-chip company's annual meeting, particularly for such a recently-appointed chief executive, and reflects the nervousness within RSA's boardroom about the extent to which Mr Lee has alienated shareholders.

The brokers have also been offering to arrange meetings with RSA's new chairman Martin Scicluna and Edward Lea, its senior independent director, before investors make their voting decisions.

An RSA spokeswoman said its brokers "have not been proactively canvassing opinions on voting intentions. However, we naturally have regular dialogue with all our shareholders, both directly and through our corporate brokers, as every company does and it is normal practice to discuss voting intentions in the run-up to the AGM each year."

However, several investors in the company said they had been explicitly asked by RSA's brokers whether they would vote in favour of Mr Lee's re-election. Of these, one said it had yet to make a decision.

Mr Lee took over from the widely-respected Andy Haste in November 2011. In February, the group announced a one-third cut to its dividend, prompting the biggest sell-off in RSA shares in nearly a decade - since when they have recovered some of those losses.

Some shareholders were angered not only by the decision to cut the dividend, but also remarks made by Mr Lee several days later to The Sunday Times.

In an interview with the newspaper, he implied that investors should have seen the cut coming, and said: "It's like an operation. It hurts at the time, but three months later you are glad you had it."

"It's hard to think of a more crass, careless comment by a serving FTSE chief executive than that one," one of RSA's top ten shareholders said on Tuesday.

Investors are not only wavering in their support for Mr Lee. Another big shareholder told Sky News it was likely to vote against RSA's remuneration report because the company had not followed the dividend cut by axing executive bonuses for last year altogether.

RSA did cut the bonus of Mr Lee in line with the dividend reduction but declined to follow the example of rival Aviva, which cut its payout to shareholders but paid no bonuses to executive directors.

Last week, the Financial Times also reported that some RSA shareholders were unhappy about the level of fees paid for non-audit work to Deloitte, the company's auditor, because of the concerns it raised about the firm's independence.

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