Crest Nicholson shareholders reject housebuilder's executive pay report
Crest Nicholson shareholders have revolted over executive pay packets after the housebuilder slashed profit targets that help determine performance-based bonuses for its directors.
Over 58% of investors voted against the company's remuneration report at Crest's annual general meeting on Thursday.
Shareholders were venting their anger at a pay policy that will see c hief executive Stephen Stone more easily receive a £811,737 bonus on top of a base salary of £541,158, while chief operating officer Patrick Bergin could be on track to rake in £562,500, adding to his salary of £375,000.
The company's remuneration report outlined plans to cut the target for pre-tax profit growth down from 16%-20% a year earlier to 5%-8% for the 2017-2019 period, citing challenging trading conditions.
It marks the second consecutive year that the benchmark has been reduced, having previously stood at 18%-22% in 2015.
Shareholder advisory group ISS urged voters to reject the latest report, saying the move was made "without any compelling rationale provided by the company", adding that the revised targets "do not appear to be sufficiently stretching".
While the vote against was not binding, it signalled growing dissatisfaction among its investors.
"We are disappointed the advisory vote for this year's remuneration report was not carried," Crest Nicholson said in a market statement.
"As stated previously, the board expects the rate of profit growth will remain robust but not at levels seen in recent years due to tough comparators, additional investment in land, examining approaches to offsite manufacture and a new division required to support our stretching annual growth targets.
The company explained that the pre-tax profit target only accounted for 50% of the long-term incentive plan, with the remaining portion linked to capital returns, "ensuring a balance of profitability and capital efficiency for shareholders".
Crest Nicholson said it was satisfied with the conditions of its performance-based pay packets, and would focus on discussing the issue with shareholders.
"During the course of this year, we will continue this engagement with shareholders and will discuss remuneration arrangements and next year's LTIP (Long Term Incentive Plan) targets; and seek to better communicate underlying rationale to shareholders with earlier engagement."
Investors went on to formally approve the wider director remuneration policy by 96%.
In January, the housebuilder posted a 27% jump in pre-tax profits to £195 million for the year to October 31, despite a sales hit in the months surrounding the EU referendum.
Brexit fears had impacted buyer confidence and caused a temporary fall in sales and higher cancellations in the wake of the vote.
Crest Nicholson says it is now on track to build 4,000 homes and make £1.4 billion of annual sales by 2019.