Prudential Chairman To Meet Investors Over CEO's Post-Sources

9th Jun 2010 14:01

By Jessica Hodgson and Vladimir Guevarra Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Prudential PLC (PRU.LN), which last week failed in its $35.5 billion bid to acquire the Asian unit of American International Group Inc (AIG), will be meeting some of its key shareholders in the next few days to discuss possible changes with to company's management amid growing signs that it has failed to quell a backlash over the collapsed deal. Top of the agenda will be the question of whether Chief Executive Officer Tidjane Thiam should remain in his job, people familiar with the matter told Dow Jones Newswires Wednesday. Schroders Investment Management, Fidelity International and at least one more top 20 shareholder will be meeting Prudential Chairman Harvey McGrath next week, the people said. Sky News reported Wednesday that Legal & General Investment Management will also meet McGrath or senior independent director James Ross next week. The National Association of Pension Funds is also set to meet McGrath on June 22 to discuss whether a shake-up of the board is needed, according to a Financial Times report. Discussions with large institutional shareholders follow a contentious annual meeting earlier this week, where several retail shareholders called for management changes at Prudential. Many of the retail shareholders felt that the board had failed to properly grasp their opposition to the aborted AIA deal, and were angry about the costs incurred in pursuing the transaction. David Paterson, NAPF's head of corporate governance, told Dow Jones Newswires: "The NAPF and a group of its members are due to meet with the Prudential later this month. We are not planning to suggest specific changes, but we are looking to discuss the long-term interests of the business and its recent challenges to institutional investors, including pension funds." Some members of the NAPF are also investors in Prudential. The meetings would mean that there is a lingering--if not strengthening--clamor on the part of some Prudential shareholders for Thiam's resignation. McGrath and Thiam apologized during Monday's AGM for incurring GBP450 million in costs without successfully buying AIA, although they stood by the strategic logic of pursuing the deal, designed to give Prudential access to faster-growing Asian insurance markets. In that meeting, McGrath said the board still supports Thiam as CEO. Ross, the senior independent director, said the board also supports McGrath as chairman. Schroders Investment Management, which holds just over 1% of Prudential stock last week called for changes in management because of the failed AIA deal. "There are some who have been supportive of the management all the way through, some who aren't happy but don't want to destabilize the company further, and some who feel that heads have to role," one major shareholder told Dow Jones Newswires. "There are five or six pretty household names in the third camp, people who feel this just isn't an acceptable outcome," he said. Another major shareholder, also speaking on condition of anonymity, said: "We've made it clear we're not happy with the way this has been conducted." This shareholder said that it wasn't happy with Thiam remaining as CEO but was minded to keep McGrath as chairman to maintain continuity on the Prudential board. Reports last week said that Michael McLintock, CEO of M&G Investments, Prudential's investment management arm, may replace Thiam and that former Prudential CEO Mark Tucker could replace McGrath. Still, some shareholders questioned whether it was a good move to change the management of the company. Euan Stirling, investment director for Standard Life Investments, which has less than 1% of Prudential stock, told BBC Radio 4 on Monday: "We look to the future and would it serve our interest best if there were removals of senior executives from the top of the company? I don't think that is the case." On Friday, Thiam told CNBC: "I am ultimately a servant of the shareholders. It's not my decision to say I should stay or not stay. The shareholders are free to fire me any day as they wish," he said. "But I would only step down if I felt that they want me to step down. That is not what was expressed this week, and very strongly, with one or two exceptions. Our top shareholders want the company to continue implementing its strategy," Thiam said. Standard Life Investments and Legal & General Investment Management declined to comment Wednesday. A Prudential spokesman said: "The board has set out its position clearly on Monday." -By Jessica Hodgson and Vladimir Guevarra; Dow Jones Newswires; +44207 8429373; [email protected]. (END) Dow Jones Newswires June 09, 2010 09:01 ET (13:01 GMT)