I could have got twice as much, says Berkeley's Pidgley

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The Independent Online

Tony Pidgley, the chief executive of Berkeley Group, was defiant yesterday after more than one-fifth of shareholders voted against a controversial incentive package for him and fellow directors that could make them £100m, insisting he could have made twice as much money if the company had accepted offers from venture capitalists.

Tony Pidgley, the chief executive of Berkeley Group, was defiant yesterday after more than one-fifth of shareholders voted against a controversial incentive package for him and fellow directors that could make them £100m, insisting he could have made twice as much money if the company had accepted offers from venture capitalists.

A restructuring plan for the housebuilding company was passed overwhelmingly as a special resolution at an extraordinary meeting. This required 75 per cent support and it received 92.4 per cent of the votes cast.

The accompanying management share scheme, which required a simple majority, received 77.6 per cent of votes in favour and 21.3 per cent against, with a number of abstentions. The two resolutions were interdependent.

Speaking after the meeting, held in a country house hotel in Surrey, close to Berkeley's Cobham headquarters, Mr Pidgley, said that the vote was "significantly in favour" of the management incentive plan. He said that the concerns voiced by some shareholders in the media were symptomatic of the tragedy of Britain plc ."I've always found this [the concerns] difficult to understand. I do believe we fully consulted with shareholders. They should talk to the management, not say things through the press," he said.

The Association of British Insurers, one of the two leading bodies representing institutional shareholders, suggested that even more shareholders might have voted against the management resolution, if it had not been linked to the restructuring plan.

Peter Montagnon, the head of investment affairs at the ABI, added: "This is a substantial protest which should cause companies to consider very carefully how they should be structuring such schemes. It would not have been difficult for Berkeley Group to meet the objections of shareholders by an adjustment to the structure which would have still enabled the management to reap substantial rewards for value created."

Berkeley plans to sell off its traditional housebuilding interests, aiming to return £12 a share, or £1.45bn, to investors by the end of 2010 from the money raised. If it achieves this goal, four executive directors will be rewarded with a 15 per cent stake in the remaining company, which will focus on urban regeneration schemes. It is estimated this could be worth £100m. Mr Pidgley will get 8 per cent of the rump company, which could be worth more than £50m.

Mr Pidgley revealed that the company had in the past rejected more than one approach from financial buyers who were willing to incentivise management to a much greater extent. "We could have taken this into a venture capitalist situation and had twice the amount," he said.

The ABI and some individual investors had publicly called for a tapered scheme, which would have paid out greater awards, the more money that was returned to shareholders, rather than the current all-or-nothing scheme. Some shareholders had also been uneasy about the seemingly unlimited nature of the potential payout, as it is not possible to say how much the rump company, which will remain listed, may be worth in six years. Mr Pidgley said that in discussions with shareholders, the odd institution had suggested that it [the incentive scheme] should be capped but not the majority.

Answering a question from media after the EGM about whether he may work again with his son, also called Tony Pidgley - who used to sit on the Berkeley board and who last year made an unsuccessful takeover approach for the company - he said: "My son would be first to say that it is better for fathers and sons to be fathers and sons. It's best for him to do his thing and me to do mine."

The EGM itself was uneventful. The only disquiet evident was the attendance of two people who were campaigning for a piece of unused Berkeley land, next to its development in Wapping, to be turned into a memorial site for civilians who died in the UK during the Second World War. Marianne Fredericks, from the group, asked Mr Pidgley to "honour your commitment to the memorial park".

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