Persimmon defends £600m bonus pot for top team
Housebuilding giant Persimmon has defended its executive pay plan that could see its senior managers share a £600 million bonus pot.
The UK's biggest housebuilder by volume said the scheme is "designed to drive outperformance" by returning cash to shareholders, growing the firm and boosting its share price.
The York-based firm hit back after one of its investors, Royal London Asset Management (RLAM), said the payment was "too high" for an industry where growth is being supported by Government measures such as the Help to Buy scheme.
The move comes as executive pay is under increasing scrutiny from shareholders.
Earlier this month more than a third of shareholders in advertising giant WPP refused to back boss Sir Martin Sorrell's mammoth £70 million pay deal as it was accused of a ''history of excessive pay''.
BP faced a humiliating shareholder rebellion over executive pay in April, when almost 60% of shareholders rejected the oil giant's remuneration report, which awarded boss Bob Dudley £13.8 million.
Persimmon said in 2012 that between 2013 and 2021, it would return £1.9 billion to investors as it expanded.
This growth would see around 150 managers share about £600 million in bonuses, with chief executive Jeff Fairburn set to earn about £100 million.
The Charles Church builder said since the plans were put in place the group has boosted new home building by 56%, invested more than £2 billion in new land and returned over £1 billion to shareholders.
During that period its share price has jumped from around £6.20 to just under £20.
RLAM has voted against the Persimmon deal at its inception and every year since.
RLAM's head of sustainable investments Mike Fox said: "We feel that this level of reward is way too high."
Mr Fox said recently a number of companies recently could "in theory" have awarded large sums in remuneration, "but in reality should have questioned whether that was reasonable".
RLAM pointed out that in recent years, the housing industry has been supported by various Government programmes to ease the UK's housing shortage, as well as the maintenance of rock bottom interest rates set by the Bank of England since March 2009.
Mr Fox said: "Any board operating a housing company should ask itself the wisdom of making an award of that scale in that context, even if that award is justifiable."
Persimmon said: "This is a long-term plan that runs for almost a decade which is designed to drive outperformance through the housing cycle and to incentivise the management to deliver the capital return, grow the business and increase the share price. Unlike many other schemes, it extends to around 150 executives."
Persimmon said in February it posted a 34% jump in pre-tax profits to £637.8 million for 2015 compared to a year ago. It added during the period it completed 8% more homes, totalling 14,572, with the average price rising by 4.5% to £199,127.