Persimmon defends £100 million chief executive payout amid profit upgrade
The company has come under heavy fire over a long-term incentive plan which will see its chief executive pocket £100 million.
A controversial £100 million payout to the chief executive of Persimmon overshadowed an upbeat trading update from the housebuilder, which has said profits for the full year will come in ahead of expectations.
The company has come under heavy fire from politicians over a long-term incentive plan introduced in 2012, which will see chief executive Jeff Fairburn pocket the bumper pay award.
Mr Fairburn became eligible for £40 million of the payout on New Year’s Eve.
It is part of a wider £800 million award, linked to profit and housebuilding targets, to be shared among management.
In a statement, Persimmon defended the payout, saying: “The long-term incentive plan scheme was approved by circa 85% of shareholders in 2012.
“The long-term incentive plan is a long-term plan that was intended to run for almost a decade and which is designed to drive outperformance through the housing cycle and to incentivise the management to deliver the capital return, grow the business and increase the share price.
“Unlike many other schemes, it extended to around 150 executives.”
The pay controversy led to chairman Nicholas Wrigley’s and remuneration committee chair Jonathan Davie’s resignation late last year.
Mr Fairburn’s payout, which has been criticised by the likes of Liberal Democrat leader Sir Vince Cable, comes as Persimmon benefits from the Government’s Help to Buy scheme.
On Tuesday, the group disclosed that revenues rose 9% to £3.42 billion in 2017, with completion volumes growing 6% to 16,043.
The group’s average selling price increased by 3% to £213,300.
Persimmon said that it experienced healthy customer demand for new homes through the autumn sales season, with the value of its forward sales book standing at £1.35 billion, 10% ahead of 2016.
As a result, the firm said that it anticipates pre-tax profits for the year to come in “modestly ahead of market consensus”.
Persimmon added: “The group continues to pursue disciplined high-quality growth in its regional markets in support of the Government’s desire to increase housing supply across the UK.
“We remain mindful of market risks including those associated with the uncertainty arising from the UK leaving the EU.
“However, we are keen to deliver further improvement in our housing output and remain ready to invest wherever the local planning environment is supportive.”
The housebuilder said that completion volumes grew 6% to 8,249 in the second half of the year versus the first six months.