Persimmon CEO, Jeff Fairburn is about to get a bonus in shares valued at around £116m. He is not alone amongst Persimmon Executives about to get a huge windfall. Around 140 members of the senior management team will be sharing a pot of around £800m.
Is Fairburn’s bumper payday simply the bounty of five years of successful trading or an unintended consequence of an LTIP without a cap?
Given that the the Chairman of Persimmon first asked the CEO to donate some to charity and then resigned we can be sure Nicholas Wrigley knew the bonus would create some seriously negative PR.
His resignation followed that of Jonathan Davie, the Chair of the Remuneration Committee that failed to foresee how lucrative the incentive plan would become.
A Persimmon statement acknowledged the lack of cap:
“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.
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.”