Persimmon has reduced bonuses for three top bosses after a £100m payout to chief executive Jeff Fairburn sparked a public backlash.
Britiain’s second-largest housebuilder said it would cut Mr Fairburn’s payout – believed to be the largest bonus ever for a UK-listed company – to £75m. Finance director Mike Killoran will receive £53m – a £24m reduction on what he had previously been awarded – and Managing director Dave Jenkinson will see his bonus cut by £2m to £38m.
“It is clear that the absence of a cap ... has given rise to the potential for pay-outs which, when triggered in full, will be significantly larger and paid earlier than might reasonably have been expected at the time the scheme was originally put to shareholders,” Persimmon said on Friday.
The company has come under fire for the huge payouts under its long-term incentive plan after benefiting from taxpayer funds under the help-to-buy scheme.
Aberdeen Standard Investments, an asset management firm and one of the Persimmon’s largest shareholders, labelled Mr Fairburn’s bonus as “grossly excessive”.
Persimmon’s chairman and the head of its pay committee quit last year, after conceding that they should have capped the potential rewards under the bonus scheme.
Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management said: “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.”
“However, even after this reduction, in our view the scale of the remuneration on offer under this plan is still extremely generous given the government’s support for the sector through the Help To Buy scheme.”
Persimmon, Britain’s second-biggest housebuilder, introduced a long-term incentive plan in 2012 that gave share options to management which they are able to sell once the company has returned a set level of cash and dividends to investors. Persimmon’s share price has risen from about £4 when the scheme was agreed, to around £24.50 on Friday.
The company said it had now made changes to the 2012 plan’s entitlements for the three most senior executives who will receive less shares which they won’t be allowed to sell until a later date.
In total, 150 executives had previously been due to share in a pot worth around £600m.
