The chairman of FTSE 100 housebuilder Persimmon and the chair of its remuneration committee have both resigned following a row over the company’s pay policies, which have attracted considerable criticism for the size of bonus payments to senior executives
In a regulatory announcement Persimmon said chairman Nicholas Wrigley had informed the board of his intention to resign. He will remain in post to allow an orderly process while the board seeks a successor. In addition Jonathan Davie, senior independent director and chairman of the remuneration committee, has resigned from the board with immediate effect.
The housebuilding giant introduced a long term incentive plan in 2012 (2012 LTIP). Earlier this year it emerged that around 150 managers were set to share about £600m in bonuses, with chief executive Jeff Fairburn potentially in line to receive over £100m.
The company’s annual general meeting saw shareholders vote through the remuneration plans, but a number of investor advisory groups and MPs raised questions about the size of the bonus payments.
In its latest statement, Persimmon said: ‘The board believes that the introduction of the 2012 LTIP has been a significant factor in the company's outstanding performance over this period, led by a strong and talented executive team.
‘Nevertheless, Nicholas and Jonathan recognise that the 2012 LTIP could have included a cap. In recognition of this omission, they have therefore tendered their resignations.’
The company is now looking to appoint a new chairman. Nigel Mills, a former Citigroup executive, has been appointed senior independent director and will lead the process. Marion Sears has been appointed chairman of the remuneration committee.
Persimmon said: ‘Since 2012, when the capital return plan strategy was launched and the 2012 LTIP was approved by shareholders, the company has made substantial cash returns to shareholders at the same time as increasing the size of the business and delivering significant shareholder value.
‘Since the strategy was launched, Persimmon has delivered an increase in the number of new homes supplied of over 65%, invested £2.9bn in new land, returned 485p per share (£1.5bn) in cash and increased the proposed capital return by 49% to 925p per share, c. £2.85 bn.
‘The board would like to express its thanks to Nicholas Wrigley and Jonathan Davie for their valuable contribution to the success of the company.’
Report by Pat Sweet
