Prosecute Persimmon’s £75m boss, says investor
Aberdeen believes bonus storm chief may have broken company law
A LEADING shareholder in housebuilding firm Persimmon is investigating whether chief executive Jeff Fairburn can be prosecuted under the Companies Act over his £75 million bonus, The Mail on Sunday can reveal.
Top investor Aberdeen Standard Investments, which manages £650 billion of pensions and savings, has instructed its in-house lawyers to find out whether there are grounds for a criminal prosecution.
Aberdeen believes Fairburn may have broken the Companies Act by taking such a bloated pay package, which it considers to have tarnished the reputation of the company he leads.
For a leading shareholder to raise this question is an extraordinary twist in the most acrimonious pay row in the City for decades. A breakdown in relations between a company and its investors on this scale is unprecedented in the FTSE 100, where disputes are normally polite and conducted behind closed doors.
Fairburn could make as much as £75million under a controversial share scheme that has turned him into the poster boy for fat-cat pay – even after giving up a chunk of incentives that could have taken the package to more than £100 million. Finance director Mike Killoran and managing director Dave Jenkinson will also make tens of millions of pounds each.
The incentive scheme, put in place in 2012, was flawed because it did not have an upper limit and also because it was based on the share price which has since risen strongly. The price was hugely boosted by the introduction of the taxpayer-backed Help to Buy housebuilding scheme in 2013.
Euan Stirling, head of stewardship at Aberdeen Standard, which has a 2 per cent stake in Persimmon, told the building company’s annual meeting in April that the bosses may have breached Section 172 of the Companies Act 2006. This sets out a director’s duty to act in ways that will promote the success of a firm.
Stirling says that if an action were to go ahead against Fairburn, he would be the first director ever to be prosecuted under the clause.
He added that Aberdeen Standard is looking into whether there is a basis to go to the authorities and request that they prosecute Fairburn – and possibly also Killoran and Jenkinson.
‘People keep saying, “Shareholders should do more” – so one of the reasons we’re doing this is because every time there’s a scandal we also get upset about it and we do what we can. The directors have the responsibility here and they’re acting the wrong way in my view.’
Stirling also criticised the vague wording of the Companies Act which he said ‘may make it impossible to do anything’. He said Section 172 may need to be redrafted.
Any potential legal action was unlikely to result in any money being paid back to investors, he said.
Stirling appeared last week in front of MPs to discuss executive pay following a disastrous performance from Persimmon’s pay committee chairman Marion Sears, who was drafted in as Persimmon’s remuneration committee chairman in December after her predecessor quit last year over the scandal.
Sears was lambasted by MPs on the Business, Energy and Industrial Strategy Committee for not knowing the pay of an average member of Persimmon staff.
All Mine! Haul for coal chairman’s son
THE fat cat pay scandal has spread to Bisichi, a small Londonlisted coal mining company where Tory donor Sir Michael Heller is the chairman and his son Andrew is the chief executive.
Heller junior was paid just under £900,000 last year – nearly 10 per cent of the firm’s entire £11million stock market value. If Apple boss Tim Cook was paid the same proportion of the US company’s value, he would pocket about $90billion a year.
Andrew Heller has been paid nearly £8 million in a decade. His property tycoon dad also controls a company called Clerewell, which donated £50,000 to the Conservative Party during the 2017 Election campaign.
At Bisichi’s annual meeting on Wednesday, investors accounting for nearly 30 per cent of the shares voted against the pay report.
Paul Mumford, a fund manager at Cavendish Asset Management, which has an 18 per cent stake, said ‘outrageous’ pay is as prevalent at small firms as at larger ones.
Cash register rings for Bolland:
FORMER Marks & Spencer chief executive Marc Bolland has been paid £62,899 by the company he left two years ago despite a collapse in profits since his departure.
Bolland is due to be paid the sum in shares next month, according to the retailer’s annual report. It will take his total pay to £17.2million for six years in power, ending in April 2016.
Laura Wade-Gery, the former online director, is also due to be handed shares worth £30,200 under the same bonus scheme linked to its 2015 performance.
New chairman Archie Norman said that ‘organisational failure’ has left the chain on a ‘burning platform’.
The annual report pointed out weakness in the online business, relaunched under Wade-Gery in February 2014 at a cost of £150 million, as an area of concern.
The company said it has been losing online market share. It singled out a warehouse in Castle Donington, Leicestershire, which had been heralded by Bolland as key to the firm’s success.
It said the facility, reputed to have cost £200 million, ‘was built at great expense but is never likely to achieve planned capacity, lacks resilience and cannot currently meet peak demand’.