Housebuilder Persimmon has been forced to defend the appointment of non-executive director Nigel Mills after shareholders came close to rejecting him over his links to the company’s financial advisers, Citi.
At the company’s annual meeting at York racecourse on Thursday shareholders elected Mills, a senior adviser at Citi, by a narrow margin – with 107m votes in favour, 96m votes against and 730,000 votes withheld. Before the meeting investor groups had raised concerns that he would not be independent.
Speaking at the meeting, the chairman, Nicholas Wrigley, said the board had considered the issue very carefully and was “totally convinced” that Mills was the right person. “We respect shareholders’ opinions but we believe Nigel is independent and his appointment is in line with the provisions of the UK corporate governance code,” he said.
“Some of us have known him for some time and have seen him in operation and believe he will bring significant skills and values to the board,” said Wrigley, who stressed that Mills had had nothing to do with Persimmon’s business for the past three years.
“However, given that a significant minority have voted against him on the back of this [Institutional Shareholder Services] report, I intend to meet shareholders over the course of the next few months [to discuss the matter].”
The investor body ISS advised shareholders against approving tMills to the Persimmon board because of his employment with Citi, which, they concluded, meant he would not be independent. The ISS also noted that Mills sits on Persimmon’s remuneration committee, which is meant to be entirely staffed by independent directors.
The Institutional Voting Information Service (Ivis), which provides corporate governance research to investors, also highlighted the relationship between Mills and Citi, issuing an amber alert, its second highest level of warning, to raise concerns.
Investors at Persimmon’s AGM also raised doubts about a share scheme set up in 2012 which could hand out an estimated £600m to 150 directors by 2022.
Mark Bentley, a Persimmon shareholder and director at the individual shareholder society Share Soc, said many other individual investors shared his concern about the scheme.
“As a shareholder I’m outraged that executives really have the best of both worlds, with massive private equity-style rewards in the event of success but also strong salaries and bonuses irrespective of what happens to the business,” he said. “Really it seems fair that it should be either/or and not both.”
Wrigley told shareholders on Thursday he found it “rather disappointing” that people had failed to focus on the fact that the remuneration was “a big number spread over up to nine and half years rather than an annual award, which is by definition much smaller”.
“I am comfortable that actually – as we are repeatedly being told by shareholders that they want remuneration to be linked to the long-term shareholder value – we have a long-term scheme,” he said.
“It then infuriates me that we get criticised. So shareholders have to make their minds up, approve it and then let it run its course.”
In a trading update before the annual meeting Persimmon said sales revenues had risen 8% to £2.15bn since the start of the year. Weekly private sales per site were 6% ahead of last year as the company sold 7,598 new homes, with an average selling price of £220,000, up 5.8%.
