Housebuilder Persimmon narrowly avoided a full-blown shareholder revolt today, as almost half of voting shareholders refused to approve a pay report which had awarded boss Jeff Fairburn a £110m bonus.
The results of Persimmon's annual general meeting (AGM), which came out late this afternoon, revealed that of the shareholders who voted, a massive 48.52 per cent condemned the pay report.
Yet a chunky 30.9 per cent of shareholders abstained from voting. Only 2.22 per cent of shareholders voted against re-appointing Fairburn – City A.M. understands that one major shareholder was considering ousting the boss, but decided "the board had endured enough short-term turmoil".
The controversy follows a long-term incentive plan (LTIP) introduced in 2012, which was approved by shareholders, which allowed executives to be awarded an uncapped bonus. Fairburn voluntarily reduced his initial £110m cheque to £75m, but investors including Aberdeen Standard were still outraged by the payout.
"Although the executive directors made significant reductions and adjustments to their 2012 LTIP awards – a scheme that was approved by 85 per cent of shareholders in 2012 – we recognise that a sizeable number of shareholders remained concerned over the level of remuneration that ultimately resulted from the vesting of these 2012 awards," Persimmon said today in a statement.
"In February 2018, the executive directors informed the remuneration committee of a series of decisions intended to reduce the scale of payments under the 2012 LTIP, to cap the future value on exercise to a maximum value equal to £29 per share, to extend the holding periods under any second tranche and to make these changes subject to continued employment.
"We are grateful for the support that allows us to draw a line under the 2012 LTIP debate and move forward."
Persimmon's directors have all also waived their salary increases in 2018, and executive directors have waived their 2018 bonuses.
The housebuilder had been attempting to persuade shareholders that the massive rewards were deserved, due to strong performance. It appears just enough were convinced by the argument.
"Total shareholder returns to date from the launch of the group's new strategy in 2012 now exceed 500 per cent, placing us at number 2 in the FTSE 100 and we have delivered more than £8bn to shareholders in that period," a spokesperson rallied.
Somewhat overshadowed by the pay debacle, Persimmon also announced the appointment of new chairman Roger Devlin.