Persimmon management to share £600M over next 5 years

A leading city investor has called on Persimmon to cut back on a pay plan that would see management sharing £600M.

Persimmon’s executive pay plan has come under fire after it emerged management will share £600M over the next five years.

The payment represents one of the biggest at a FTSE 100 company, excluding banking.

Jeff Fairburn, Chief Executive, could earn more than than £100M.

In light of the current housing crisis and government support for the housebuilding industry, Mike Fox, from Royal London Asset Management, said the payments were too high “in all circumstances” and called on the board to show restraint.

Following recovery from the 2008 recession, the scheme was put in place with around 150 managers given the opportunity to earn shares worth up to 10% of the company’s total value, provided they hit tough targets on returning money to investors.

The company recently said that all targets had been met, and analysts say it is likely that the scheme will pay out in full. Persimmon shares have more than tripled in value since the incentive plan was put in place, rising from £6.20 to about £20.

A spokesperson for Persimmon said: “This is a long-term plan that runs for almost a decade, 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 extends to around 150 executives.”

Critics say that Persimmon executives are being rewarded handsomely for simple being in charge during the recovery in the housing market.

Disclosure of the size of the payments is likely to stoke the debate over executive compensation.

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