Housebuilder Crest Nicholson is to push ahead with its original plans for executive bonuses, despite a shareholder revolt against the company’s pay policy at its annual general meeting this week
About 58% of shareholders voted against the directors’ remuneration policy on Thursday, on the grounds the performance targets were too easy as the profit targets needed to trigger bonus payments were too low.
However, Crest Nicholson said the shareholder vote was ‘advisory’ and ‘non binding’, and claimed its share award scheme was ‘sufficiently stretching’ and will remain in place for the time being.
Chief executive Stephen Stone is set to receive almost £812,000 in share bonus on top of a salary of £541,158, while chief operating officer Patrick Bergin could collect £562,500, in addition to pay of £375,000.
Standard Life Investments, Crest Nicholson’s second biggest shareholder, confirmed it voted against the remuneration report.
It said: ‘We were disappointed that the company chose to substantially reduce the profit range at which incentives for management were paid, without consulting shareholders. As a result, we voted against the remuneration report.’
In a statement Crest Nicholson said: ‘Whilst we note that our remuneration policy continues to be well supported with a 96% in favour vote, we are disappointed the advisory vote for this year's remuneration report was not carried.’
The company said its conversations with shareholders ahead of the AGM suggested that the main area of concern relates to the profit before tax per share (the ‘PBT element’) targets for the 2017-2019 long term incentive plan (LTIP) which makes up 50% of the performance condition.
It said the PBT element was agreed by the remuneration committee taking into account the uncertain economic backdrop and the competitive environment in which the company operates. The remaining 50% of the LTIP is based on targets relating to return on capital employed.
The statement said: ‘The committee believes that this combination of measures presents a sufficiently stretching LTIP.
‘Every year, we have a regular dialogue with leading shareholders on a range of matters including remuneration. During the course of this year, we will continue this engagement with shareholders and will discuss remuneration arrangements and next year's LTIP targets; and seek to better communicate underlying rationale to shareholders with earlier engagement.’
