Persimmon’s chief executive will see his bonus cut by around £25m following criticism of “grossly excessive” rewards
The housebuilder said Jeff Fairburn has agreed to reduce the number of shares he is entitled to under the company’s 2012 Long-Term Incentive Plan (LTIP). Chief financial officer Mike Killoran and group managing director Dave Jenkinson have also agreed to cut their entitlements.
However, Fairburn is still in line for a bonus worth around £74m.
The LTIP has been sharply criticised in some quarters, with Aberdeen Standard Investments, one of Persimmon’s largest shareholders, calling it “grossly excessive”.
Meanwhile, Liberal Democrat leader Vince Cable said the payouts have been “built on what is essentially a government subsidy” because Persimmon’s share price has been significantly boosted on the back of the Help to Buy scheme.
In December, Persimmon’s chairman Nicholas Wrigley and the head of its Remuneration Committee, Jonathan Davie, resigned over the failure to cap the LTIP.
In a statement to investors, Persimmon’s board said it believes the LTIP has been a “significant factor in the company’s outstanding performance”.
“Nonetheless, it is clear that the absence of a cap, in recognition of which the chairman and former Remuneration Committee chairman offered their resignations from the board on 14 December 2017, has given rise to the potential for payouts which, when triggered in full, will be significantly larger and paid earlier than might reasonably have been expected at the time when the scheme was originally put to shareholders,” it added.
“These decisions by the executives have been welcomed and fully supported by the Remuneration Committee, which has also noted Jeff Fairburn’s intention to donate a substantial proportion of his total reward to charity. The board regards these decisions as an appropriate response by the executives.”
