Persimmon directors amend bonus entitlements
Directors at Persimmon have agreed to amendments to the bonuses they receive under the firm’s Long Term Incentive Plan, which has recently seen the firm criticised for not capping the amount awarded under the scheme.
The Board of housebuilder Persimmon, head-quartered in York, this morning announced that the amendments to the entitlements for Jeff Fairburn, CEO, Mike Killoran, CFO, and Dave Jenkinson, Group managing director.
It comes after two board directors resigned last year after they felt they should have included a cap on the bonus scheme. Earlier this month, Fairburn announced he would give a “substantial” amount of his multi-million-pound bonus to charity; the first of two tranches he was to receive under the uncapped incentive plan.
Persimmon this morning stated: “The executives have informed the Remuneration Committee of a series of decisions intended to reduce the scale of payments and extend the holding period under any second tranche.”
Jeff Fairburn and Mike Killoran will reduce their overall entitlement by a number of shares equal to 50% of the shares to which they would become entitled on the second vesting. They have also decided to extend until 2021 the holding period applying to 50% of any shares under any second vest, other than shares sold to cover tax liabilities.
Dave Jenkinson will reduce his overall entitlement by a number of shares equal to 50% of the shares subject to awards granted to him since being promoted to the Board to which he would become entitled on the second vesting. He has decided to extend until 2020 the holding period for 25%.
All three Executives have decided to cap the value of any future exercise of the remaining second vesting entitlement to a maximum value equal to £29 per share.
Under the terms of the 2012 LTIP, which was approved by 84.9% of shareholders voting at an EGM, rewards for the 133 participants vest in two tranches. The first of these – 40% of the total – vested on 31 December 2017 and will be capable of exercise from next week onwards. The second and final tranche – 60% of the total – will vest once the Group has returned 620p per share in cash to shareholders, in line with the scheme rules.
The firm said there will be no changes to the 2012 LTIP for other plan participants.
Persimmon said: “The Board believes that the LTIP put in place in 2012 has been a significant factor in the Company’s outstanding performance. In particular, it has contributed to industry-leading levels of margin, return on assets and cash generation.
“Nonetheless, it is clear that the absence of a cap, in recognition of which the Chairman and former Remuneration Committee Chair offered their resignations from the Board on 14 December 2017, has given rise to the potential for pay-outs which, when triggered in full, will be significantly larger and paid earlier than might reasonably have been expected at the time the scheme was originally put to shareholders.
“These decisions by the Executives have been welcomed and fully supported by the Remuneration Committee which has also noted Jeff Fairburn’s intention to donate a substantial proportion of his total reward to charity. The Board regards these decisions as an appropriate response by the Executives. Accordingly, the Board unanimously supports this amendment which it believes to be in the interests of the Company as a whole.”