Following a 54 per cent rise in the company’s share price over the past year, Persimmon is reported to be planning high payouts to senior board members despite the backdrop of a continued housing crisis in the UK and criticisms of the industry’s failure to hit housebuilding targets.
In the context of major housebuilders seeing high profits recently, the reported £240m payout planned for Persimmon executives includes Mike Farley, outgoing CEO, who is thought to be collecting £20m in shares this December. A 10 year bonus scheme which started in 2011 tasks managers to return £1.9bn to shareholders, with resulting bonuses predicted to reach a total of nearly £620m.
Persimmon said the LTIP (Long Term Incentive Plan) scheme has been designed to,
“Drive outperformance through the housing cycle,” and “incentivise the management to deliver the capital return, grow the business and increase the share price.”
Other firms such as The Berkeley Group have been the target of media criticism, with founder and chairman Tony Pidgley’s six-fold pay rise to £23.3m making the headlines in 2014. Housebuilders are building more homes however – while Bovis reported a 9 per cent rise in profits in the first half of this year, it also built a record 1,525 houses.
A spokesperson from Persimmon told Housebuilder & Developer:
“Since the LTIP scheme was put in place, Persimmon has delivered a 56 per cent increase in new homes completed, invested over £2bn in new land, opened 812 new development sites, returned £1bn to shareholders and created thousands of jobs, while at the same time building a stronger, bigger business.”