THE LIST OF SHAME
New register will name leading firms facing outrage over pay ... as two top bosses fall on their swords after MoS revelations
Boss of building giant quits after MoS bonus probe
THE chairman of a FTSE 100 housebuilding company has resigned after a Mail on Sunday investigation into ‘outrageous’ taxpayer-funded bonuses at the firm, including nearly £130 million paid to its chief executive.
Persimmon’s chairman Nicholas Wrigley stepped down on Friday along with senior director Jonathan Davie, who was in charge of the company’s pay committee, amid a row over what is thought to be the most lucrative bonus scheme in UK corporate history.
More than £800 million worth of shares in Persimmon are set to be dished out to the firm’s executives and more than 140 of its regional managers.
The Mail on Sunday revealed in November that chief executive Jeff Fairburn can cash in about £50 million worth of shares at the end of this month, while he will be able to pocket a further £80 million next year. Wrigley, a former banker, and Davie admitted last week that they should have put a cap on the share scheme when it was introduced in 2012.
Critics have accused Persimmon of cashing in on the housing crisis and Catherine Howarth, chief executive of Share Action, has branded Fairburn’s bonus ‘utterly outrageous’. The launch of taxpayer-backed Help To Buy loans in 2013 helped Persimmon’s share price to soar, massively inflating the value of the bonus scheme – despite Help To Buy’s failure to solve the housing crisis.
Pressure is mounting on Fairburn to forgo some of the bonus or give part of it to charity, but Persimmon said his plans for the bonus were ‘a private family matter’. Fairburn, 51, left his York comprehensive at 17 to go into construction. He joined Persimmon in 1989 and rose through the ranks to become chief executive in 2013.
Others set to cash in huge cheques are finance director Mike Killoran, in line for shares worth nearly £90 million, while managing director Dave Jenkinson stands to make about £60 million.
A REGISTER naming and shaming companies whose shareholders have protested over fat cat pay is expected to be launched this week.
The idea for the list, which will be published online, came from Prime Minister Theresa May who said in August that it would help expose corporate greed and attempt to restore trust in capitalism.
Any FTSE All- Share company where at least one in five shareholders vote against pay policy will appear on the register, which is expected to include a number of household name businesses.
However, some firms that have been hit by major scandals will escape embarrassment because the list only covers shareholder revolts in the past 12 months.
Notable absentees are likely to include Persimmon, where the chairman and one of the most senior directors quit on Friday because of their part in devising a pay scheme dating back to 2012.
The resignations came after a recent investigation by The Mail on Sunday which revealed that Jeff Fairburn, chief executive of the housebuilding firm, is in line for an astonishing £50 million share award in the New Year.
Persimmon’s incentive scheme is one of the most lavish in corporate history. The company is likely to pay out shares worth more than £800 million to senior managers.
Fairburn’s total jackpot comes to around £130 million. He is in line to receive the remaining £80 million next year.
Chairman Nicholas Wrigley handed in his notice alongside senior director Jonathan Davie. As chair of the pay committee, Davie was responsible for putting the incentive scheme in place five years ago.
Persimmon said the two men now realise they should have set a ceiling to limit the amount bosses could be paid under the long-term reward plan. ‘In recognition of this omission, they have therefore tendered their resignations,’ it added.
Some 15 per cent of Persimmon shareholders voted against the scheme in 2012 when it was introduced. That is below the threshold for the new register, but it is still a significant revolt.
Under the plan, rewards are l i nked to t he performance of shares. However, critics point out that the Government’s Help to Buy loan scheme launched in 2013 has significantly pushed up Persimmon’s share price.
Pressure is mounting on the company to introduce a retrospective cap on the scheme and for Fairburn and his colleagues to forgo part of their rewards or make large donations to charity.
One large investment firm, Royal London Asset Management, called on Fairburn and the pay committee to ‘acknowledge their errors and correct them’. However, Persimmon said it has no plans to change its scheme.
The Mail on Sunday understands Wrigley and Davie had wanted to introduce a cap but were unable t o do so because t he scheme involves more than 140 regional managers, rather than just a handful of executives.
A spokesman for Persimmon said Fairburn’s plans for his bonus were ‘a private family matter’.
Garry White, chief investment commentator at City firm Charles Stanley, said: ‘ Much of Persimmon’s share price gain is due to luck. It came from a Government subsidy.’
Catherine Howarth, chief executive of investment group ShareAction, urged Wrigley and Davie to donate at least half of their bonuses to housing charities.
The Investment Association, which is compiling the register, is providing links to allow named companies to explain how they are tackling shareholder concerns.