Aviva to make £14m payment to shareholders over share U-turn
PUBLISHED: 12:06 30 April 2018 | UPDATED: 12:06 30 April 2018
Aviva will offer goodwill payments to shareholders who sold preference shares after it announced its now-failed share cancellation scheme.
The insurance firm revealed plans to scrap £450m of shares to make savings of £38m a year in its full-year results on March 8 but backed down on March 23 after a backlash.
Now the EDP/EADT Top 100 company has said it will make payments to the estimated 2,000 investors who sold their shares at a lower price than they returned to after the furore – which the firm estimates will cost £14m.
Unlike ordinary shares, preference shares provide no voting rights but often come with a high rate of interest and are popular with savers and pensioners.
In an era of low interest rates cancelling such shares may seem prudent but Aviva has found itself taking a hit to its reputation and now under investigation by the Financial Conduct Authority.
The company, which employs 5,000 people in Norfolk, has appointed KPMG to oversee the payments and plans to begin the process in August.
Chief executive Mark Wilson said: “We accept that whatever action we take, we will continue to hear divergent views on this topic from various stakeholders.
“However, together with our previous announcement not to proceed with the cancellation of the preference shares, we hope this goodwill payment goes some way to restoring trust in Aviva.”