Our views

Persimmon finally listens to shareholder concerns


Ashley Hamilton Claxton, Head of Responsible Investment

23 February 2018

Commenting on Persimmon’s decision to reduce the pay outs available under its 2012 LTIP, Ashley Hamilton Claxton, Head of Responsible Investment at Royal London Asset Management, said:
We are pleased that in the end Persimmon’s board has listened to shareholder concerns on pay. 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. 
We have consistently called for remuneration committees and boards to use their discretion when faced with pay outs that are unacceptable and are pleased that in this case the company has finally recognised the need to do this.
However, even after this reduction, in our view the scale of the remuneration on offer under their 2012 Long Term Incentive Plan is still extremely generous given the government’s support for the sector through the Help To Buy scheme. Despite this, we hope the company and shareholders can now draw a line under this issue, allowing management to devote their focus solely to the running of the company.

We are pleased that in the end Persimmon’s board has listened to shareholder concerns on pay. 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. 

We have consistently called for remuneration committees and boards to use their discretion when faced with pay outs that are unacceptable and are pleased that in this case the company has finally recognised the need to do this.

However, even after this reduction, in our view the scale of the remuneration on offer under their 2012 Long Term Incentive Plan is still extremely generous given the government’s support for the sector through the Help To Buy scheme. Despite this, we hope the company and shareholders can now draw a line under this issue, allowing management to devote their focus solely to the running of the company.

Past performance is no guide to the future. 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.