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Persimmon chairman quits over boss's £100m bonus

Nicholas Wrigley quits house builder over failure to cap bonus structure that could net chief executive Jeff Fairburn £100 million.

 
Persimmon chairman quits over boss's £100m bonus
 

Nicholas Wrigley has quit as chairman of Persimmon (PSN) over his role in the company's incentive structure that is set to hand chief executive Jeff Fairburn a £100 million bonus.

Persimmon announced Wrigley's departure, citing the 2012 long-term incentive plan (LTIP).

Remuneration committee chairman Jonathan Davie is also leaving the business over the payout.

'The board believes that the introduction of the 2012 LTIP has been a significant factor in the company's outstanding performance over this period, led by a strong and talented executive team,' said Persimmon in a statement to the market.

'Nevertheless, Nicholas and Jonathan recognise that the 2012 LTIP could have included a cap. In recognition of this omission, they have therefore tendered their resignations.'

Under the plan, Fairburn has more than 4.8 million in share options in Persimmon. Given the £26.23 share price, once exercised those shares will be worth £127 million.

The price Fairburn will pay for the shares depends on the amount Persimmon has paid out to shareholders in dividends under its 10-year plan, launched in 2012 to deliver £6.20 per share, with higher dividend payments resulting in a lower exercise price.

Persimmon has been running well ahead of schedule in the payment of dividends, with £4.85 already paid out over the last five years.

Fairburn will be able to exercise 40% of his options on New Year's Eve, with the remainder when the £6.20 target is reached.

According to Reuters, Fairburn could net a £100 million profit from his options.

Shares in Persimmon were down 23p this morning on the news. The FTSE 100 rose 13 points, or 0.2%, to 7,462.

Outside the FTSE 100, shares in small cap LED maker Luceco (LUCE) crashed 45% to 128p after the company said profits would be £3.5 million lower than expectations at £13.2 million.

The group said margins had weakened, an issue that had not been identified sooner due to 'an incorrect assessment of the value of the group's stock'. Financial controller Ian Pritchard has resigned as a result.

Joining Luceco at the bottom of the FTSE Small cap index was SDL (SDL), down 24% at 350p after the software firm issued a profit warning due to delays in the closure of a number of deals.

4 comments so far. Why not have your say?

Long Term Investor

Dec 15, 2017 at 17:45

As a long term investor in Persimmon, I have been delighted with their performance. The management team has done very well, but £100,000,000? that is extemely unfair. It has been the employees from the Brickies through to the Site Managers who have done the heavy lifting. Fairburn should step aside from the great majority of his windfall and give a bonus to all his staff.

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bouleversee

Dec 15, 2017 at 18:50

And there ought to be enough left over to give a Christmas present to shareholders as well or maybe if their profits are so high they might consider reducing the prices of their houses.. There is no way that any individual should receive such an egregious sum just for doing their already well paid job and being in the right place at the right time. The idiots who set up the incentive scheme deserved to lose their jobs. What were the institutions doing to let it go through? One can't help wondering how he will be able to afford to take all the options up, though I am not clear as to what he is actually going to have to pay for them. .All these incentive schemes are far too complicated. Keeping their jobs should be sufficient incentive IMO.

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Roger Savage

Dec 15, 2017 at 19:55

Help to Profit (aka Help to Buy) - state subsidies for house builders that then report record profits and pay their directors megabucks out of the proceeds. Disgraceful use of public funds - house builders should fund their own schemes for those buying their shoddy boxes. I'm sure Help to Buy wouldn't exist if the property industry weren't political party donors - cash for policies, open corruption.

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Mike1

Dec 16, 2017 at 11:06

And who could possibly object to a progressive Robin Hood windfall bonus tax?

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