Saturday, December 16, 2017

Property looters

Persimmon is one of the biggest beneficiaries of the government’s help-to-buy programme, which has lifted sales and boosted house prices across the UK. Under help to buy, the Treasury provides a loan worth 20% of the value of a property, although the buyer must also provide a 5% deposit from their own funds. The programme has provided a significant boost to property developers’ sales. Persimmon’s share price has more than doubled since help to buy launched in April 2013. About half of Persimmon homes sold last year were to help-to-buy recipients, meaning government money helped finance the sales. The payouts, in company shares that can then be cashed in, are linked to the FTSE 100 company’s dividend payments and stock market performance, which has been significantly boosted by the help-to-buy scheme. 

The huge share award worth around £110m,  part of £500m to 150 senior staff and believed to be Britain’s most generous ever bonus payout, will be presented to the chief executive, Jeff Fairburn. It was attacked by politicians, charities and corporate governance experts, who described it as “obscene”, “corporate looting” and a reward based on “taxpayer subsidies”

The chair of housebuilding firm Persimmon has resigned over his role in orchestrating the bonus saying he regretted not capping the company’s bonus scheme and was leaving “in recognition of this omission”. Jonathan Davie, Persimmon’s senior independent director and chair of the remuneration committee, which sets company pay, also resigned with immediate effect.

The scheme, which is based on the level of dividend returned to shareholders, was meant to take 10 years to pay out, but the company has accelerated dividend payments. This means Fairburn, other executives and more than 100 middle managers are likely to collect all of the bonus shares by July 2018, far ahead of the 2021 schedule. 

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