黑洞社区

The head of the country鈥檚 biggest housebuilder has said Persimmon鈥檚 decision to pay its executives eye-watering bonuses has saddled the industry with a reputation it pays its bosses too much.

Barratt chief executive David Thomas said the controversial bonus scheme, introduced in 2012, was 鈥渘ot the norm鈥� and meant the industry was now having to fight off a perception its executives were netting excessive pay packets.

Persimmon鈥檚 latest annual report shows its long-term incentive plan helped chief executive Jeff Fairburn pocket 拢47m last year, while group finance director Mike Killoran was handed 拢36.7m with group managing director Dave Jenkinson picking up 拢20.3m.

Thomas (pictured, middle) told 黑洞社区: 鈥淲hat you鈥檝e seen is everyone getting dragged into it simply because it鈥檚 about housebuilders being paid too much money, so I think that reputationally it鈥檚 problematic for the industry, unquestionably.鈥� 

鈥淩eputationally it鈥檚 problematic for the industry, unquestionably鈥�

David Thomas, Barratt

Thomas is the latest voice to criticise the scheme, which is set to dominate the agenda next Wednesday at Persimmon鈥檚 AGM, being held at York racecourse.

In February, Redrow founder Steve Morgan said the industry was 鈥減eed off鈥� with the amounts awarded, while Persimmon鈥檚 sixth-largest shareholder, Aberdeen Standard Investments, said Fairburn鈥檚 bonus was 鈥済rossly excessive鈥�. And this week Liberal Democrat leader Vince Cable, a former business secretary, told 黑洞社区 the awards were 鈥渁bsolutely atrocious behaviour鈥�.

Thomas, who Barratt鈥檚 latest annual report shows picked up 拢3.3m in 2016, said Persimmon blundered by failing to reset its shares-based bonus scheme, which came in a year before the coalition government introduced Help to Buy to encourage building and assist first-time buyers onto the property ladder, fuelling the share prices of major housebuilders.

He added that Persimmon had also caused ire in the industry because of who had actually picked up the millions.

He said: 鈥淭he housebuilding industry has been characterised by executives being quite well paid and that has largely been through the owner-manager structure. So you鈥檝e seen that through Berkeley Group, you鈥檝e seen that through Redrow. And I think that a big point of issue that people had in terms of Persimmon is it wasn鈥檛 an owner-manager, it was simply [a] professional manager receiving that amount of remuneration.鈥�

Persimmon chairman Nicholas Wrigley and remuneration committee chairman Jonathan Davie resigned in December after acknowledging they should have capped the maximum bonus. 

Thomas said: 鈥淎 remuneration committee is there to set the benchmarks against other housebuilders, other FTSE 100 companies, and [it] has got to continually challenge itself against those benchmarks.鈥�

Some suggested Help to Buy had been partly to blame for the growth of bonuses. Former head of the civil service and past chief executive of the Homes and Communities Agency, Lord Kerslake, told 黑洞社区 in January the initiative would need reforming if housebuilding executives continued to be seen personally profiting from it.

In February, Persimmon said it was cutting the bonuses it would award in the future because of the furore. Fairburn has agreed to hand back 拢30m of his potential bonus.