UK Edition
Shareholders welcome Persimmon's £50m bonus clawback
Shareholders in housebuilder Persimmon have hailed victory after three of its bosses agreed to hand back £50m of shares earned through a controversial bonus scheme.
The long-term incentive plan had drawn criticism from the City and politicians after a buyoant property market and the Government’s Help to Buy scheme helped Persimmon’s revenues and profits to surge, inflating the directors' entitlements.
The company’s chairman and the head of its remuneration committee stood down in December as a result but until now there had been no suggestion the executives would hand any money back.
Ashley Hamilton Claxton of Persimmon shareholder Royal London Asset Management, who had previously attacked the scheme, said the investment firm was “pleased that in the end Persimmon’s board has listened to shareholder concerns on pay”.
Ms Hamilton Claxton said the scheme was a “classic corporate governance failure” and the bosses’ remaining payouts were still “extremely generous” but that she hoped the company and its shareholders “can now draw a line under this issue”.
Based on yesterday’s closing share price, Jeff Fairburn, chief executive, has agreed to hand back around £25m of his potential £99m bonus, while chief financial officer Mike Killoran will give back £24m of his £78m payout.
Group managing director Dave Jenkinson, who joined the board later than the other two bosses, will give back £2.5m of £40m and all three will have their future payouts capped at £29 per share.
Mr Fairburn also plans to donate a "substantial proportion" of his payout to charity, but is yet to reveal the precise amount.
Adam Matthews of the Church of England, a Persimmon shareholder, said it continued “to have reservations regarding the proposed remuneration levels announced today” but was “pleased that the concerns of many investors have been heard by the board.”
Martin Mortell, of shareholder advisory group Glass Lewis, said the decision was “better late than never”.
Persimmon’s shares have risen from a low of 199p during the financial crisis to almost £28 at the start of this year, and were changing hands for £24.70 in afternoon trading.
The company said the long-term incentive plan had been a “significant factor” in its strong financial performance, boosting its margin, return on assets and cash generation.
But it said the lack of a cap meant the total pay-outs “will be significantly larger and paid earlier than might reasonably have been expected at the time the scheme was originally put to shareholders” in 2012.
Mr Fairburn and Mr Killoran will keep all of the shares they were handed in December, but have agreed to give back half of those they are yet to receive, around 30pc of their total entitlement under the scheme.