Axa shareholders urged to vote against CEO’s new pay package

Proxy advisor ISS recommends investors vote against a proposed new salary package for Axas CEO Thomas Buberl because the insurer failed to provide sufficient justification for an offer that would include a 14 percent salary increase.

With Buberl’s mandate as CEO up for renewal ahead of a new term until 2026, Axa has proposed a salary policy it says will be set for that period and will be “in line” with its biggest European competitors, Allianz, Zurich and Generali.

But ISS said it was impossible to guarantee the package – which would increase the CEO’s maximum annual package by nearly a fifth to €6.9m – was “reasonable”.

The company stressed that even after Axa’s own benchmarking, the new salary package could result in Buberl taking home more than competing CEOs at other insurers across Europe.

“Without other rationale supporting the intended positioning of CEO compensation relative to these benchmarks, particularly above their median, it is impossible to guarantee that these benchmarks are fair,” ISS said.

It also criticized the salary policy on other issues, including a level of detail related to the bonus that it said fell below industry best practices.

Advisory firms’ recommendations are closely watched for their influence on passive investors and large institutions that often follow their lead.

Glass Lewis, another proxy company, said it views big pay increases with “skepticism” and that they “shouldn’t just be the result of a benchmarking exercise.” However, it concluded that Axa had “reasonably justified” the pay rises.

In a statement, Axa said that Buberl’s salary agreement “has not changed since his appointment in 2016 and will not change until the end of his new mandate in 2026,” adding, “This means his compensation level will only be reviewed once was 10 years.”

Axa said the new contract reflects “very good financial performance” and the “successful transformation of the group” under Buberl, which included the acquisition of commercial specialty insurer XL Group in 2018.

But this integration wasn’t without its problems, as was the boss of Axa XL replaced in 2020 concurrent with downgrading a profit target for the unit.

Separately, ISS recommended investors approve Buberl’s deal for fiscal 2021. Last year he recommended voting against the compensation report for fiscal year 2020 due to concerns about adjustments in the wake of the corona pandemic. Axa shareholders urged to vote against CEO’s new pay package

Adam Bradshaw

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