Berkeley pay revamp after Pidgely outcry

Click to follow
The Independent Online

Berkeley Group, Britain's fifth biggest housebuilder, yesterday bowed to pressure from the corporate governance lobby, saying a controversial move to pay its managing director more than £1.2m from a bonus scheme that he was not even a member of had been "undesirable".

Berkeley Group, Britain's fifth biggest housebuilder, yesterday bowed to pressure from the corporate governance lobby, saying a controversial move to pay its managing director more than £1.2m from a bonus scheme that he was not even a member of had been "undesirable".

However, the upmarket housebuilder added that Tony Pidgley could keep the payment, making his total remuneration package worth more than £3.8m. The company became the focus of shareholder wrath earlier this month after its annual report revealed that Mr Pidgley senior - whose son of the same name also used to work for the company - had collected the bonus under a long term incentive plan (LTIP) set up in 2000. This was despite the fact that the executive had not actually been included in the plan.

The development prompted the influential National Association of Pension Funds and other investor groups to sharply rebuke Berkeley's decision to include Mr Pidgley after the event and to warn that they would vote against the company's remuneration report at its AGM.

Yesterday, Roger Lewis, the chairman of Berkeley, issued a statement saying: "The board acknowledges that awarding payments to Mr Pidgley as if he had been included within the LTIP 2000, which he had been left out of, was clearly undesirable and not in accordance with best practice."

While the company has decided to stick by its decision to make the award in this case, Berkeley also announced it had started a wide-ranging review of its remuneration report.

"Berkeley is considering its overall remuneration rewards this autumn and will be consulting with its principal shareholders," the company said. Victoria Mitchell, appointed chairman of the remuneration committee this June, has been meeting the company's major shareholders after they protested about the LTIP. Berkeley's shares rose 3 per cent to 842p yesterday.

The company said it would also appoint a new non-executive director to bolster the number of independent directors on the board in line with Derek Higgs' proposals on part-time directors.

Peter Montagnon, the head of investment at the Association of British Insurers, said: "The ABI was highly concerned at the serious breaches of best practice at Berkeley, in particular with regard to the retrospective award to its chief executive under the long-term incentive scheme in 2000. " Mr Montagnon added that the ABI had been in "intensive discussion" with the company, which had led to the company's chairman to make certain commitments about changing the company's remuneration policy.

The housebuilder may still face a protest at its AGM. Pirc, the shareholder lobbyists, has advised shareholders to oppose the remuneration report. It said: "We are opposed to such amendments to the LTIP, without specific approval by shareholders. A retrospective award cannot be justified as providing an incentive as the period is already over."

Comments