Investors revolt over ‘grossly excessive’ Persimmon boss bonus

Edinburgh-based financial giant Aberdeen Standard Investments led a shareholder revolt against the £75 million bonus awarded to Persimmon Homes chief executive Jeff Fairburn at the firm’s AGM yesterday as it launched a withering attack on the package in which it stated that the role of a chief executive “requires motivation that goes beyond simply amassing a fortune”.

The meeting saw two-thirds of shareholders, including other institutional investors, join ASI, which owns 2.3 per cent of Permission, in failing to back a resolution on pay at the group’s annual meeting in York.

However, while receiving the backing of just 36 per cent of investors, and 64 per cent either voting against the resolution or abstaining, the abstentions meant the vote passed with 52 per cent of votes cast.

At the meeting, Euan Stirling, head of stewardship at Aberdeen Standard Investments, took aim at Mr Fairburn’s £75 million bonus which had originally stood at a staggering £110 million as a result of the company’s uncapped 2012 long-term incentive plan (LTIP).

The plan has proven to have grossly underestimated the scale of growth in the value of housebuilders which has been supercharged on the back of the government’s ‘Help to Buy’ initiative.

And ahead of yesterday’s vote, interim chairman Nigel Mills, who stepped up when Nicholas Wrigley was forced to stand down in the wake of the bonus backlash, apologised “unreservedly” for the huge payouts.

However, that failed to temper Mr Stirling, as he said: “While we do appreciate the concessions made by the chief executive, the reduction in the amount accruing to him does not even get close to acceptable.”

He continued: “Regardless of any moral or societal duties, company directors have a legal responsibility to act in the best long-term interests of the company that employs them.”

He added: “Today’s remuneration results suggest the executive directors at Persimmon have lost sight of that.

While Mr Stirling praised the recent success of Persimmon’s executive team, Mr Stirling cited the national scandal that has resulted from Mr Fairburn’s monster payout added that “the longterm success of the company is being endangered by the reputational damage associated with grossly excessive pay”.

He warned: “Being a company director, and in particular a chief executive, requires more. It requires a broader context. It requires a personal motivation that goes beyond simply amassing a fortune. It requires an understanding of where the company sits within the society within which it operates. Little of that is evident currently at Persimmon.”

Persimmon also faced calls at the meeting to pay a real living wage, after Strathclyde Pension Fund, which manages the pensions of Glasgow City Council staff, and government workplace pension scheme Nest, demanded action.

A petition signed by more than 5,500 people was delivered to the board calling for it to meet Living Wage Foundation accreditation, which would see staff paid a minimum of £8.75 per hour, rising to £10.20 in London.