One of Britain's biggest insurance companies is drawing up secret plans to cap the pay of its star fund managers after awarding one employee more than £32m over a two-year period.
Sky News has learnt that Prudential is to impose a ceiling on the amount that employees can earn at M&G Investments, the giant asset management group it owns.
The Pru has decided to take the step after handing massive bonuses to Richard Woolnough, a bond fund manager, for 2013 and 2014.
It was unclear at what level the pay cap would be set, or how it would be structured, with both M&G and Prudential declining to comment on Thursday.
Details of the cap are still being finalised, one source said.
However, the limit is expected to apply only to the remuneration of newly employed fund managers at M&G, rather than amendments to the contracts of existing employees.
Sources said there had been some "embarrassment" within Prudential about the £17.5m and £15.3m payouts to Mr Woolnough during the previous two years, although there was no suggestion among insiders that his performance had not merited the awards.
Investors poured billions of pounds into Mr Woolnough's Optimal Income Fund since its launch in 2006, although he will have seen a sharp reduction in his pay award for 2015 after it saw substantial outflows.
Details of his pay cut will be evident in Prudential's annual report when it is published in the coming weeks, although Mr Woolnough is unlikely to be mentioned explicitly.
Under disclosure rules for public companies, Prudential, which owns M&G, has to disclose by name the remuneration packages awarded to board members but not to employees below board level.
Executive directors of public companies already have defined maximum payouts because of the proportion of their salaries which can be paid subsequently in bonuses and long-term share awards.
In practise, their theoretical maximums can still be exceeded because of the value of share options at the point at which they vest; last week, it emerged that Sir Martin Sorrell, the WPP Group chief executive, had received a payout worth over £60m under a share scheme overwhelmingly approved by shareholders.
Mike Wells, who took over as Prudential's group chief executive last year, earned more than £11m in 2014 for his work running its US operation.
Fund managers' pay deals, and the means through which they earn them, have become an increasingly visible target for pay campaigners, with the Institute of Directors among the business groups pressing for a more detailed investigation of the industry.
Prudential insiders have said that Mr Woolnough's pay awards in prior years were justified, pointing to annualised returns for the Optimal Income Fund of 8.19% since its launch in 2006, against a sector average outlined by the Investment Association of 4.7%.
The star manager's other funds include the M&G Strategic Corporate Bond Fund and M&G Corporate Bond Fund, which also manage billions of pounds.
One of the City's top fund managers, Mr Woolnough has a low profile outside the financial sector, having joined M&G after stints at Lloyds Merchant Bank, the Italian insurer Assicurazioni Generali, and SG Warburg.
In 1995, he became a fund manager at Old Mutual, where he also spent almost ten years.
Mr Woolnough's Optimal Income Fund launched in 2006 to provide investors with an alternative to traditional corporate bond funds.
His recent pronouncements to investors include a warning that they "should be less concerned with the EU referendum and focus more on the possibility of Donald Trump as US President".
"The likely impact on UK credit will be noise and uncertainty, but although Brexit fears are likely to cause volatility, a far more important political issue is the US election," he wrote this month.
Earlier this month, Prudential said operatintg profit rose by 22% in 2015 to just over £4bn, although operating profit at M&G slipped by 1% to £442m.
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