Economy

Persimmon bosses agree to hand back £50m from controversial bonus scheme

Persimmon bosses agree to hand back £50m from controversial bonus scheme

This situation shows just why help to buy is so flawed: "it fuels demand rather than supply, putting house prices even further out of reach of young people, while adding zeros to the bank balances of housebuilding executives".

The three senior executives have requested a reduction in certain share entitlements by 50%. "I'm sick to the teeth of seeing the headlines of greedy housebuilders".

Fairburn said last week he would set up a charitable trust after criticism of the plan that could have seen him receive share options worth over 100 million pounds.

Wrigley said he regretted not capping Persimmon's bonus scheme and was leaving "in recognition of this omission".

The first tranche of awards is due to be exercised next week. This is being reduced for the three executives.

Jeff Fairburn and Mike Killoran were reducing their overall entitlement by a number of shares equal to 50% of the shares to which they would become entitled on the second vesting.

Persimmon's board said Mr Fairburn and finance director Mike Killoran would waive half of the second instalment of their bonus and delay when they can claim it until 2021. In addition to the existing obligation to hold 50% of the shares from any second vest for 12 months, other than shares sold to cover tax liabilities, he has made a decision to extend until 2020 the holding period for 25% of such shares.

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The company's chairman and the head of its pay committee quit a year ago, under fire from British media and some investors for failing to reform the scheme.

Persimmon said that all three executives had agreed to reduce the number of shares they were entitled to under the company's Long Term Incentive Plan (LTIP).

Mr Jenkinson has also chose to reduce his overall entitlement by a number of shares equal to 50 per cent of the shares subject to awards granted since being promoted to the board.

This week the company's sixth-largest shareholder, Aberdeen Standard Investments, labelled Fairburn's bonus as "grossly excessive", and said it remained "a huge concern" despite the executive's recent pledge to donate some of his package to charity.

"This incident has been a classic corporate governance failure and highlights the need for remuneration committees to step up and make decisions if circumstances beyond a company's control change", said Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management, which owns a 0.5% stake in Persimmon.

This article was published on 23 Feb 2018 (last updated on 23 Feb 2018).


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