House builder Berkeley Group has been rebuked by shareholders over its pay policy, with about a fifth of independent investors failing to back a scheme that handed the firm’s boss more than £23m last year.
About 14.5% of shareholders directly opposed the remuneration report at the annual meeting in Stoke D’Abernon, Surrey, with a further 4% withholding their vote. However, if the directors’ near 10% stake in the builder is excluded, 20% of shareholders declined to support the plan that led to chairman Tony Pidgley being paid £23.3m.
The payment to Pidgley was part of a £42m bonus payout shared by the top five executives at Berkeley, who appear to be set for one of the biggest pay awards handed out by a UK-listed company. Last year’s packages represent the start of a series of payouts to the company’s top executives, that could total £500m in the next six years.
A company spokesman said: “Berkeley’s policy is to reward success over the long term. These awards reflect the value delivered to shareholders through a total shareholder return of 400% over the past five years and 500% over the past 10 years.”
Pidgley, who was adopted from Barnardos by travellers when he was four and spent his early years living in a disused railway carriage, co-founded Berkeley nearly 30 years ago. He has since built a fortune estimated to be worth about £212m, according to the Sunday Times Rich List (paywall), which makes him one of the UK’s wealthiest business executives.
The Berkeley vote came after weeks of comment about the size of the pay packets being awarded to directors of the UK’s largest housebuilders, all of which seem to be riding a booming market.
Pidgley told investors the market was being buoyed by “a stable operating environment, supported by a decisive general election result in May”. He said demand was being driven by a “combination of good demand fundamentals, the lack of supply of good quality new homes in London and the south of England, continued low interest rates and a growing economy”.
In a trading update, Berkeley confirmed it was on track to meet its earnings target of £2bn during the next three years.
Pidgley’s optimistic mood was mirrored by Steve Morgan, chairman of Redrow and of Wolverhampton Wanderers football club, as the rival builder announced record annual results, with profits up by more than 50%.
Morgan said: “For the first time in our history, we generated turnover in excess of £1bn, up 33% on last year. We built and sold over 4,000 homes across the UK last year, up 12% from the year before and around 42% more than in 2013. Pre-tax profits also reached record levels, up 53% as we saw the benefit from our early site acquisitions post the downturn.”
The government’s Help to Buy scheme remained “a major driver for the industry to increase output”, he said, stating that 40% – or 1,374 – of the company’s private legal completions during the year took advantage of the scheme, up from 1,023 (35%) last year.
Berkeley and Redrow shares were up about 2% after their positive statements.
