Persimmon boss Jeff Fairburn is in line for an £88m bonus
Housebuilder Persimmon has been accused of trying to buy shareholders’ silence over a massive bonus scheme with a multi-billion-pound bung.
The lender has announced a bumper dividend for investors over the next three years, which will take total returns since 2012 to £4.1billion.
Critics said the bonanza was a shameful attempt to shut down criticism of a share bonus worth £88million coming to chief executive Jeff Fairburn.
Paula Higgins of the Homeowners Alliance said: ‘The shareholders are cashing in on the housing crisis, just like Mr Fairburn. It’s absolutely shocking.
‘We’re so reliant on a few big housebuilders getting subsidies from the Government, and these payouts seem completely unreasonable.’
Reuben Young of housing pressure group Priced Out said: ‘Persimmon is using these dividends as a bribe to shareholders so they can put up with outrageous bonuses being paid to directors.
‘It can get away with this because it’s propped up by the Government’s ludicrous Help to Buy scheme, which inflates house prices and housebuilders’ profits, while making housing even more unaffordable for average people.’
Agreed in 2012, Fairburn’s bonus has seen him branded Britain’s new face of corporate excess. The boss was branded ‘Mr £131million’ last year because at one stage the share price meant this was the value of his bonus.
The firm’s share price has jumped almost 250 per cent since the plan was announced, receiving a completely unexpected boost from Help to Buy, where the State loans first-time buyers up to 40 per cent of the value of their property to use as a deposit.
Buyers must eventually pay this money back but in the meantime the cash is handed straight to developers such as Persimmon.
Campaigners say Fairburn’s payout is a reward for accepting a government subsidy.
A few shareholders have spoken out, with Standard Life Aberdeen and Royal London Asset Management among those to have raised concerns. But most have refused to say anything, despite describing themselves as champions of corporate governance.
Among those in line for payouts are US behemoth Blackrock, which will get up to £221million from the dividend plan; Wall Street bank JP Morgan, set for £164million; and Vanguard Group, due for a £153million payout. Blackrock has raised concerns in the past few months, though it never did so publicly.
Recent pressure from investors led Fairburn to take a 30 per cent cut to his bonus, which is due to pay out in 2021, and he has also promised to give an undisclosed sum to charity.
Yesterday, he said he regretted what had happened and would have liked to take action sooner, but added he believed the payout was now proportionate.
He said: ‘We came to a decision as quickly as we could. We’ve worked really hard to improve the business and get to the position that we’re in.’
Fairburn, 51, said he did not see Help to Buy as a subsidy because the loans are paid back by house buyers, and that he believes it has been good for ordinary people.
It came as Persimmon reported a 25 per cent surge in profits to £966.1million in 2017, and unveiled plans to pay dividends of 235p per share for the next three years – 125p more than expected.
It sold 16,043 houses last year – nearly half through Help to Buy – while average selling prices climbed 3.2 per cent to £213,321.
Persimmon sources said the dividends are solely intended to return excess capital to shareholders and are not linked to the bonus scheme in any way.
Shares jumped 4.7 per cent, or 116p, to 2604p.