Persimmon’s shareholders revolt over chief executive’s £75 million payout
The housebuilder suffered a blow as 48.5% of shareholder votes cast were against Persimmon’s remuneration report.
Persimmon has endured an embarrassing shareholder rebellion over excessive pay after investors vented their anger at a £75 million payout for the housebuilder’s chief executive.
At the company’s annual general meeting, 48.5% of shareholder votes cast were against Persimmon’s remuneration report.
In a statement, Persimmon recognised that a “sizeable number” of its investors were concerned about its remuneration scheme.
The chairman of Persimmon has apologised “unreservedly” to shareholders over the housebuilder’s handling of executive pay.
Nigel Mills, chairman on an interim basis, said at the company’s annual general meeting that the debacle was a matter of “profound regret”.
It comes after chief executive Jeff Fairburn’s pay packet sparked outrage among politicians and shareholders. The Persimmon boss is in line for a near £75 million payout, including a £25 million share payout in the summer.
Earlier this year, shareholders and politicians united to condemn what would have been an even higher £100 million payout, until Mr Fairburn voluntarily moved to calm the furore by handing back £25 million in bonuses.
Mr Mills said the row has overshadowed the group’s stellar performance.
It is a matter of profound regret that we got to the position where we had a company with an exceptional management team, delivering exceptional, market-beating performance, that has been overshadowed by a row over pay. Nigel Mills, Persimmon chairman
“I recognise that there has been significant strength of feeling from some shareholders over this issue.
“And so please let me take this opportunity to apologise unreservedly to our shareholders. This could all have been handled better. Indeed it should have been.
“It is a matter of profound regret that we got to the position where we had a company with an exceptional management team, delivering exceptional, market-beating performance, that has been overshadowed by a row over pay.”
He also pointed out that shareholders voted through the pay deal in 2012 and that no-one could have predicted that the “performance of the business would be so good over such a long period of time”.
At least one investor, the Church of England, promised to vote against the company’s remuneration report.
Royal London Asset Management (RLAM), which holds a 0.5% stake in Persimmon, has said the pay awards were still “extremely generous”.
This is despite Mr Fairburn pledging to forgo his annual bonus next year and hand over a “substantial amount” of his pay award to charity.
Collectively, three Persimmon bosses agreed to hand back about £50 million in bonuses last month to calm the mounting anger.
Aberdeen Standard Investments, which holds a 2.3% stake in Persimmon, is also voting against the pay award.
Euan Stirling, head of stewardship at the fund, said: “The reduction in the amount accruing to him from £110 million to £75 million does not even get close to acceptable.
“Company directors have a legal responsibility to act in the best long-term interests of the company that employs them.
“Today’s remuneration results suggest that the executive directors at Persimmon have lost sight of that because the long-term success of the company is being endangered by the reputational damage associated with grossly excessive pay.”
In a separate trading update, Persimmon said the property market remains “solid”.
In a trading update, the Charles Church group said forward sales were around 8% higher year on year at £2.76 billion since January 1.
It added that pricing conditions continue to be firm across the regions, with the average selling price up to around £236,500 across 9,048 homes sold in the private market, up 1% from 8,928 a year ago.
“Our weekly private sales rate per site since the start of the year of around 0.85 … reflects solid market conditions,” it added.