Persimmon boss reportedly told to pay back £120m bonus by people who signed it off. Would you do that?

It is one of the worst examples of corporate excess seen in Britain, but it’s not the recipient we should be training our fire on

James Moore
Chief Business Commentator
Monday 05 February 2018 11:58 GMT
Persimmon Homes profits have been fuelled by the Government’s help-to-buy scheme sparking a controversy over its bosses’ bonuses
Persimmon Homes profits have been fuelled by the Government’s help-to-buy scheme sparking a controversy over its bosses’ bonuses (Rex)

Imagine you get a job and you’re told you’ll get a really big bonus if your employer hits some really big numbers.

Imagine, too, that it does that, but it’s as much because of a Government wheeze as it is down to anything you’ve done.

Nonetheless, when the shareholders are asked to vote on your bonus you get the sort of endorsement in a free and fair poll that would make even Kim Jong-un envious.

Then, just as you’re looking at yachts, it’s reported that the same shareholders want you to give it back.

What do you do?

I imagine most people would respond with words of four letters before telling Siri to “find me high priced employment lawyers”.

A bonus like the £120m handed to Persimmon Homes’ boss Jeff Fairburn – who according to The Sunday Telegraph has been put in a situation that’s very similar to the one I’ve described – will get you as many of them as you could possibly want.

Mr Fairburn’s payment, which comes in the form of shares, is frankly absurd and his saying he deserved it at a company results presentation could hardly have been more tone deaf. It was like chucking a Molotov cocktail into a spilled pool of petrol at a service station.

The Government’s underwriting of home loans to first time buyers through its help-to-buy scheme when there’s a shortage of affordable homes for them to purchase has created a financial nirvana for companies like Persimmon. It as good as guarantees their profits.

As such, while I might be over egging it to suggest that, say, Theresa May could run the thing and make a decent fist of it, almost any moderately competent executive probably could.

Despite that, Persimmon’s big shareholders said they were happy to pay the man. In April, his package secured the support of more than 90 per cent of the ones who bothered to use their votes (a lot didn’t).

If The Sunday Telegraph is right when it reports that he is now being told to pay back 90 per cent of the money or get on his Madone custom made mountain bike with Damien Hirst artwork, he’s entitled to say, “screw you guys I’m saddling up”. Are you going to ask the other 150 or so managers who are sharing in a £600m bonanza to give their money back too? No? Did you follow the recommendation of voting advisor Pirc to oppose the bonus scheme when it circulated its opinion? No?

Then get lost. I’ve got £120m in shares coming to me, and all my mates are getting paid too. There’s no way in hell I’m going to give 90 per cent of it up. Nor are they. Nor would you.

And there’s the rub. Because they wouldn’t.

Who on earth would give up 90 per cent of a lottery win that they would never be able to make back, even on CEO money.

Mr Fairburn has been painted as the villain of this piece but he isn’t, not really.

The company’s remuneration committee put his package together in conjunction with the remuneration advisors it hired. Its chairman and the chairman of the company have since resigned. It was then approved by the City’s mostly somnolent institutional investors.

Mr Fairburn has become the poster child for corporate excess. The immorality of a housing boss being handed such a package when the YMCA is running ads on Twitter highlighting the plight of rough sleepers speaks for itself.

But the problem lies with the people we’re told now want their money back. Some of them ought to resign too. And give their bonuses back while they’re at it.

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