Persimmon starts to address investor concerns on pay


Ashley Hamilton Claxton, Corporate Governance Manager

27 April 2017

As expressed last year, we have long-standing concerns about pay at Persimmon. The company’s performance has been impressive, but we continue to believe that the sheer scale of remuneration available under Persimmon’s current long term incentive plan (LTIP) is excessive.  This could see an LTIP payout equivalent to 10% of the value of the company, with the CEO potentially receiving an award in excess of £100 million. We will be voting against this year’s remuneration report, against the Chair of the Remuneration Committee and against Nigel Mills: he sits on the Remuneration Committee, but we do not consider him independent because of his ties to one of the company’s brokers.
The house building sector is one where companies can experience a significant uplift from factors outside of their control, such as interest rates and government policy. As such we question the value of pay plans that provide high windfall payouts to executives.
Despite these historic concerns, we are pleased that Persimmon has proposed a remuneration policy for the next three years that limits performance share awards to just twice the directors’ annual salaries. This will significantly reduce the maximum payouts available. With that in mind, we’ll be voting for the binding remuneration policy.

As expressed last year, we have long-standing concerns about pay at Persimmon. The company’s performance has been impressive, but we continue to believe that the sheer scale of remuneration available under Persimmon’s current long term incentive plan (LTIP) is excessive. This could see an LTIP payout equivalent to 10% of the value of the company, with the CEO potentially receiving an award in excess of £100 million. We will be voting against this year’s remuneration report, against the Chair of the Remuneration Committee and against Nigel Mills: he sits on the Remuneration Committee, but we do not consider him independent because of his ties to one of the company’s brokers.

The house building sector is one where companies can experience a significant uplift from factors outside of their control, such as interest rates and government policy. As such we question the value of pay plans that provide high windfall payouts to executives.

Despite these historic concerns, we are pleased that Persimmon has proposed a remuneration policy for the next three years that limits performance share awards to just twice the directors’ annual salaries. This will significantly reduce the maximum payouts available. With that in mind, we’ll be voting for the binding remuneration policy.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.