Building Boss Gets £110 Million Bonus

The chair of house building firm Persimmon has resigned over his role in orchestrating a £100m-plus bonus for the company’s chief executive.

According to a report in The Guardian, Nicholas Wrigley, the company’s chair and a former banker, said he regretted not capping the company’s bonus scheme and was leaving “in recognition of this omission”. The scheme, believed to be Britain’s most generous ever bonus payout, will give more than £500m to 150 senior staff, including the award to the chief executive, Jeff Fairburn. Wrigley had put pressure on Fairburn to donate some of his bonus to charity, although Persimmon declined to comment.

The payouts, in company shares that can then be cashed in, are linked to the FTSE 100’s dividend payments and stock market performance, which has been significantly boosted by the help-to-buy scheme. Under help to buy, the Treasury provides a loan worth 20% of the value of a property, although the buyer must also provide a 5% deposit from their own funds.

The programme has provided a significant boost to property developers’ sales since George Osborne introduced it in 2013. Persimmon’s share price has more than doubled since help to buy launched in April 2013. About half of Persimmon homes sold last year were to help-to-buy recipients, meaning government money helped finance the sales.

Fairburn is due to collect the first £50m worth of bonus shares on 31 December. The scheme, which is based on the level of dividend returned to shareholders, was meant to take 10 years to pay out, but the company has accelerated dividend payments. This means Fairburn, other executives and more than 100 middle managers are likely to collect all of the bonus shares by July 2018, far ahead of the 2021 schedule. Fairburn’s tranche of shares was worth £128m based on Friday night’s closing share price, but he is likely to take home about £110m once he has paid the option prices on the shares.

John Hunter, the chair of the UK Shareholder Association, which represents small investors, said the bonus scheme was “completely ridiculous” and was based solely on the dividend payments. He said: “Any bloody fool can pay dividends – it’s just paying them their own money. The scheme is doing the opposite of what it is meant to do – incentivise performance and retention. How does this incentivise people when they’re all sitting on fortunes? If you’re a manager and you’re getting millions you would retire on the spot.”