The chairman of housebuilder Persimmon has resigned over his role in awarding a £100 plus million bonus to its chief executive Jeff Fairburn
Persimmon confirmed to the AJ that chair Nicholas Wrigley, alongside senior independent director Jonathan Davie, would be stepping down over the incident - effectively caused by the lack of a limit being placed on its bonus scheme.
The company said both Wrigley and Davie recognised its bonus scheme ’could have included a cap’, and had handed in their notices in ’recognition of this omission’.
The bonus scheme – understood to be the biggest in the UK – is set to begin shelling out more than £800 million to 150 senior employees on New Year’s Eve. The top three members of staff will receive more than £230 million between them.
Payments for the scheme, set up in 2012, were calculated based on the business’s stock market performance, which has greatly benefited from the introduction of the government’s Help to Buy scheme in 2013. Since then, the housebuilder’s share price has more than doubled.
Fairburn will collect the first £50 million tranche of a bonus worth around £100m at the current share price on 31 December, it is reported. The scheme was originally meant to take nearly a decade to pay out, but the company decided to speed up payments, meaning that Fairburn, the other executives, and more than 100 middle managers will probably receive all £800 million by July 2018 instead of 2021.
The Guardian newspaper reported that Wrigley had asked Fairburn to donate a sum from his bonus to charity, but Persimmon refused to comment on the matter.
Persimmon’s bonus scheme has been widely slated by politicians and charities.
Vince Cable, leader of the Liberal Democrats, told the Guardian the scale of the Persimmon bonus was ’obscene’ and was built on a ’government subsidy’ in the form of the Help to Buy scheme.
’It is reminiscent of the worst excesses of corporate greed that helped to create the financial crisis, when short-termism was heavily incentivised and long-term planning ignored,’ he added.
Persimmon is also perceived as having little regard for design quality and has not been short-listed for a Housing Design Award for at least a decade.