Persimmon bosses bow to pressure and sacrifice millions in bonuses

Build Me Up       Persimmon shares have done well over the past five years              Source Bloomberg            
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The bonus payout to the chief executive of Persimmon will be cut by £25m following fierce criticism over excessive rewards.

Persimmon said today that Jeff Fairburn, chief executive of Britain's second largest housebuilder, had agreed to cut his entitlement to a tranche of a shares-based payout that looked likely to be worth a total of just under £100 million.

The row over bonus levels led to the departure of Persimmon's chairman past year.

Persimmon has attracted fire for its incentive plan, which awards tens of millions to the bosses of a company that has benefited from public subsidy in the form of the government's Help-to-Buy equity loan 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".

It said they would get a reduced number of shares and the date at which they could sell some of the stock had been pushed out.

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The company maintained that the bonus scheme, backed by more than four-fifths of investors when it was set up, had been a key factor in its "outstanding performance". Managing director Dave Jenkinson will see his bonus cut by £2m to £38m.

Since 2012, Persimmon's share price has risen from about £4 to its current level of around £24.50.

"Nonetheless, it is clear that the absence of a cap, in recognition of which the chairman and former remuneration committee chair offered their resignations from the board on 14 December 2017, 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 all three executives chose to cap the value of any future exercise of the remaining second vesting entitlement to a maximum value equal to £29 per share.

First revealed previous year, the levels of pay angered some investors and prompted the resignations by two of the company's board members shortly before Christmas.

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