Boss of LV could rake in millions if he succeeds in selling business to US private equity firm Bain Capital for £530m
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 last year, weeks before hiring advisers to sound out a sale of the firm, is understood to be planning to stay as chief executive following a controversial proposed sale to Bain.
Although he has not yet signed a contract, the Mail has learned that the former Army colonel would be handed an ownership stake in LV if he clings on.
End of an era: LV, formerly known as Liverpool Victoria, is owned by its 1.16m members due to its status as a mutual
A shareholding for Hartigan would give him a slice of the business which he could cash in on if Bain sold the company later.
The terms of his salary would also likely be higher under private equity ownership. Last year, Hartigan, 58, was paid £1.2m.
LV, formerly known as Liverpool Victoria, is owned by its 1.16m members due to its status as a mutual. Around 340,000 hold with-profits policies, meaning 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 to reveal how Hartigan and other board members would benefit from the sale so policyholders can work out if the deal is 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 inquiry this year into the planned demutualisation, and asked Hartigan and LV chairman Alan Cook how they would be rewarded if they stayed on. They said they would not take cash bonuses, but were vague on future pay structures.
Martin Shaw, chief executive of the Association of Financial Mutuals, said: ‘LV was established 180 years ago, and each generation of members has contributed to the surplus in the expectation that those funds will contribute to the future growth of the business and to the benefit of future generations. So a demutualisation contradicts what millions of past members were promised.’
LV said: ‘There have been no firm decisions regarding the role of the chief executive or the terms of any contract and there won’t be until the outcome of the transaction. The present chief executive would like to be included in the exciting journey ahead. However, his continued focus is to ensure all members have the information they need ahead of the vote.’