The boss of LV could rake in millions if he succeeds in selling the business to US private equity firm Bain Capital for £530m.
Mark Hartigan, who joined the firm last summer, weeks before consulting advisers to explore a sale, is believed to be planning on staying as chief executive in the wake of a controversial Bain sale.
The Mail learned that the former Army colonel will be given a stake in LV if he continues to fight.
End of an era: LV, formerly known as Liverpool Victoria, is owned by its 1.16m members due to its status as a mutual
Hartigan could have a share of the business if Bain sells it later. Hartigan would be able to cash in on this shareholding.
Private equity ownership would likely make his salary more attractive. Last year, Hartigan, 58, was paid £1.2m.
LV, formerly Liverpool Victoria was owned by its 1.16m members because it is a mutual. Around 340,000 members have with-profits insurances, which means they share in LV’s performance.
But if Bain buys the business after winning approval from financial regulators and LV’s members, it will demutualise the insurer – ditching its proud history of putting customers first.
Members will receive a ‘modest’ payment from Bain in return for giving up their stakes, and withprofits policyholders will get a further payment when their policies mature – though the amount has yet to be decided.
Critics want LV’s board members Hartigan and others to be made aware of the benefits so policyholders can decide if the deal will be in their best interests.
Labour MP Gareth Thomas, who chairs the All Party Parliamentary Group on Mutuals, said: ‘Every previous demutualisation of a big financial mutual has been driven by the chair, chief executive and board and none of them ever suffered financially.
‘The consumer owners of Liverpool Victoria deserve to know how the pay and financial package of the current chair and chief executive will change and why they won’t be open and transparent on this issue.’
His group conducted an investigation this year into the planned demutualisation and asked Hartigan as well as LV chairman Alan Cook how they would get rewarded if they stayed. They stated that they would not accept cash bonuses, but were vague about future pay structures.
Martin Shaw, chief executive of Association of Financial Mutuals stated: ‘LV was founded 180 years back, and each generation of its members has contributed to the surplus, in the expectation that these funds will contribute to future growth of the company and for the benefit of future genera. A demutualisation is in contradiction to promises made by millions of former members.
LV stated that there have not been any firm decisions regarding the role or terms of any contracts. This will change based on the outcome of the transaction. The current chief executive would love to be part of the exciting journey. His main concern is to make sure all members have the information they require before the vote.