Persimmon shareholders revolt over chief executive's 'grossly excessive' £75m bonus

Jeff  Fairburn’s bonus could pay 4,100 of the company's full-time staff the Living Wage for a year

Ben Chapman
Wednesday 25 April 2018 19:13
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After the outcry, Mr Fairburn offered to hand back £25m and said he would donate a “substantial proportion” of the bonus to charity
After the outcry, Mr Fairburn offered to hand back £25m and said he would donate a “substantial proportion” of the bonus to charity

Persimmon shareholders rebelled on Wednesday against a “grossly excessive” £75m bonus awarded to the housebuilder’s chief executive Jeff Fairburn.

In a vote at the company’s annual general meeting, 48.5 per cent of ballots were cast against the pay deal while 30 per cent of shareholders abstained.

The company said it recognised that “a sizeable number of shareholders remained concerned” about the incentive plan, which also saw other senior executives awarded tens of millions of pounds.

Mr Fairburn’s pay prompted widespread condemnation in December, after it was reported that he would collect more than £100m. After public outcry from politicians and shareholders, Mr Fairburn offered to cut the bonus by £25m and said he would donate a “substantial proportion” to charity.

Finance director Mike Killoran saw his £77m pay packet reduced to £53m and managing director Dave Jenkinson’s was cut by £2m to £38m.

Euan Stirling, head of stewardship at Aberdeen Standard Investments, which owns a 2.3 per cent stake in Persimmon, said the reduction “did not even get close to acceptable”.

“Regardless of any moral or societal duties, company directors have a legal responsibility to act in the best long term interests of the company that employs them.

He said the “reputational damage associated with grossly excessive pay,” endangered the company’s long term success.

Campaign group ShareAction attended Persimmon’s AGM in York to hand a petition to Mr Fairburn and interrogate the board on pay inequality.

The organisation pointed out that, despite the ballooning executive bonuses, many Persimmon staff do not receive the living wage.

Clem McCulloch, an AGM activist at ShareAction, said Mr Fairburn’s bonus could pay 4,100 full-time Persimmon staff at the Living Wage rate for outside of London, a level of inequality he described as “indefensible”.

“Persimmon relies on the hard work of its builders and yet it’s the executives who profit. It’s positive news to see the company’s investors speaking out for fair pay across the board,” he said.

Richard Keery, investment manager at Strathclyde Pension Fund, which manages £21bn, said: “It is fundamental that companies within the FTSE100 are able to demonstrate responsible business practice and the fair treatment of staff.

“Particularly in light of recent developments, and with a now compelling investment case behind the long term benefits of the Living Wage, it would be reassuring to see Persimmon show positive leadership in working to accredit as a Living Wage employer.”

Persimmon’s bonus scheme, which was agreed in 2012 amid a housing slump, has provoked particular anger because the profits on which it was calculated have been boosted by the government’s help-to-buy subsidy.

The policy has helped to boost house prices by drawing more first-time buyers into the market but critics say it has done little to increase supply.

Persimmon’s share price has soared from below £5 at the start of 2012 to almost £27 on Wednesday.

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