The City is shamed by its silence

CAN you hear it? Me neither. Where is the roar of protest from big City investors against the monstrous payout housebuilding firm Persimmon is handing to its boss, Jeff Fairburn?

The sum in question – a total of £800million of shareholders’ money going into the pockets of senior managers – is stupendous by any yardstick.

Plenty of people have said Mr Fairburn doesn’t deserve his £100 million-plus reward because it hasn’t sprung from his own genius, but from a share price bloated by Help to Buy. It’s actually even worse than that: it’s the result of a rookie error.

When they were designing the scheme, the chairman and the chair of the pay committee forgot to put a ceiling on rewards – an omission for which they have rightly tendered their resignations.

However it came about, this is a transfer of wealth from investors to employees on an unprecedented scale in corporate Britain. So much so, that the Persimmon Package amounts to a perverse form of socialism. Capital is being expropriated by a group of workers – albeit pretty highranking ones – from the owners.

We know shareholders are upset – why else would the chairman and his colleague have offered to resign? But what have they to say in public about this egregious incentive scheme, which in the end is paid for out of our savings and pensions? Nothing. Rien. Nichts. Nada.

Or to be strictly accurate, barely a peep. Royal London has dished out a tongue-lashing – well done – but it only has a tiny shareholding. By contrast, Blackrock, which is the world’s biggest fund manager, has a significant stake in Persimmon, and plenty of clout.

This time last year, the US giant was playing the responsible investor card with gusto, writing letters to the chairmen of every company in the FTSE350 and warning them to behave themselves on pay.

It even spelled out its belief that pay committees should have discretion to ‘make adjustments’ for ‘unintended outcomes’, a stricture that is entirely apt for Persimmon.

We are told Blackrock is expected to challenge the share scheme, but it, and other shareholders including Aberdeen Asset Management, are not saying anything publicly. Why not? If ever there was an ideal time to denounce unjustified rewards loud and clear, this is it.

It is all far too mealy-mouthed. The Investment Association, which is supposed to be the industry mouthpiece against such rewards, recently started drawing up a naughty list of companies where 20 per cent of shareholders had protested against executive excess. Remarkably, Persimmon does not make it on to the list because too few investors revolted. One City establishment figure who has spoken out is Stephen Martin, the boss of the Institute of Directors. Frankly, it would have been better if he had kept quiet. He chose to defend Mr Fairburn, saying he is ‘within his rights’ to take his bonus. Perhaps he is, contractually speaking, but that doesn’t stop it being indefensibly greedy. Tickings off behind closed doors are not good enough. The public silence of the shareholders allows Mr Fairburn to continue with his masquerade that his shameless selfenrichment is acceptable. He also seems to think he can keep quiet and it will all go away, describing his decision whether or not to donate some of his bonus to charity as a ‘private matter’.

It isn’t. This scandalous pay package, of a quoted company CEO in the housebuilding sector which is so crucial to the economy and the well-being of ordinary families, is a matter of public interest.

Shareholders should tell Mr Fairburn in no uncertain terms that he must agree to a rewriting of his incentive scheme – and they should do so publicly.

I said last week that builders risk becoming the new bankers. Seems I’m already being proved right.

Where is the roar of protest against the monstrous payouts at Persimmon?