Persimmon Homes -- CEO £100m Bonus...

[PugwasHDJ80]

Graemsay said:

John145 said:

Literally, everything in this world around us is built on capitalism. It has delivered peace, wealth and comfort. No other form of economic and political system in the world today can or has delivered this. Don't believe me? Prove me wrong with even one example.

Mariana Mazzucato might disagree with you there.

A lot of the basic technologies that go into an iPhone (CPUs, TFT displays, GPS, lithium ion batteries) came out of government research projects. Her argument is that the government is willing to invest in these things, which have a longer timeline than venture capitalists would accept.

Oh, and the UK government funded early research into jet engines, and the first jet airliner. So you can thank them for your cheap holidays to exotic locations.

There's a bit about her thesis on the TED site, along with a talk.

I'm not suggesting that we go full Momentum, but I think that the claim that governments are a brake on innovation is wrong.

[anonymous-user]

Graemsay said:

Mariana Mazzucato might disagree with you there.

A lot of the basic technologies that go into an iPhone (CPUs, TFT displays, GPS, lithium ion batteries) came out of government research projects. Her argument is that the government is willing to invest in these things, which have a longer timeline than venture capitalists would accept.

Oh, and the UK government funded early research into jet engines, and the first jet airliner. So you can thank them for your cheap holidays to exotic locations.

There's a bit about her thesis on the TED site, along with a talk.

I'm not suggesting that we go full Momentum, but I think that the claim that governments are a brake on innovation is wrong.

Pretty sure Frank Whittle set up his own company as he couldn't get the RAF/government interested, this was then nationalised some time during the latter stage of WWII.

[Brave Fart]

ATG said:

<snip>Apart from absolutely everybody, who would have guessed that that would just trigger house price inflation? Net result, government policy has shipped a load of the public's cash into the excess profit of a house builder. Well fking done.

Edited by ATG on Monday 18th December 12:37

Spot on, and certainly a cause of rising profits in the housebuilding sector. The problem with this Tory government is they aren't acting like a Tory government. Rather, they are intervening like the Socialists would - in this case with a state scheme that has achieved nothing apart from rewarding senior managers in the likes of Persimmon.
Good thread however, and some interesting points raised with no bickering - well done PH!

[crankedup]

Rovinghawk said:

crankedup said:

good workmanship cannot be afforded therefore we need to find alternatives which require a lesser skill on site construction.

Prefabrication off site generally requires higher standards from the on-site team as there's no ability to adjust once the stuff arrives.

An example is the recent trend of holding down bolts with zero adjustment- try putting in a half-tonne set of hd bolts to +- 2mm, pouring & compacting concrete around them without moving them and then tell me that lesser skills are required.

Another example is where a 160m long building had to have every part of its foundations to +- 3mm. If you think achieving that doesn't require a very high level of skill then I suggest you think again.

Fair enough, like I mentioned it’s not my field therefore I must bow to professional knowledge. But it must be easier to adjust timber than concrete?
Why is it the bloody Germans can manage without fuss and we can’t .

[sugerbear]

ClaphamGT3 said:

sugerbear said:

ClaphamGT3 said:

sugerbear said:

ClaphamGT3 said:

ExPat2B said:

I am a shareholder in Persimmon, I have no issue with the reward.

Ceo Jeff Fairburn joined in 2013.

Since then the share price has gone from 8 pounds up to highs of 28 pounds, the current Market Cap is 8.07 Billion pounds - that is a 350% increase.

That means the current executive team have added 5.7 billion pounds of value to the company - against the backdrop of brexit.

That is 5700 million pounds. 1/57 of that doesn't seem to outrageous to me.

People forget that the some of the biggest shareholders in Persimmon are AXA and Vanguard. This isn't just fat cats getting fatter, its everyday people who invest in funds as part of their pension.

ps off with yer la-di-da talking sense, they don't want your sort round here.

This is Piston heads where spouting uninformed drivel matters.....

Share price when he joined was 1080p. Share price grew 2.3 times to its present day,
During the same period Taylor wimpey shares grew 2.35 times (85 > 200). Redrow 3.5 times. Bellway 2.8 times.

The shares have tracked the sector, no more, no less. Hardly stellar performance and points to a management team that are running the business well but they are not out performing the sector.

Does that deserve such as massive bonus?

That is for the shareholders of Persimmon and the executives in question to agree. It isn't really anyone else's business.

"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"

Which is why some kind of corporate legislation is needed to address past mistakes. Make an 800 million pound mistake as the chairman and you walk away care free. Unfortunately shareholders in pension schemes are the ones that have been robbed, regardless of how much the shares have increased they are paying out over 3/4 billion to 140 people where the majority of that money should have been returned to shareholders. And I will be one of those investors. I begrudge every last penny that has been wasted on someone who has just tracked the market.

So, as an investor, what due diligence did you undertake to satisfy yourself as to their corporate governance?

Be very careful bandying the term 'robbed' around. Absolutely no one was 'robbed' by what happened.

Good corporate governance isn't my responsibility as a shareholder, it's the responsibility of the board and non--executive directors.

Blaming the investor for the failings of the board is blaming the victim(s) not the perpetrator.

Every person that invests in Persimmon pension has been robbed. The board have used the company to enrich themselves at the expense of the shareholders. The chairman and the non-exec director has resigned because of it because they were largely responsibility for its inception. Asleep at the helm or just knowingly deceitful, I am not sure which.

They were warned by the UKSA when the scheme was proposed back in 2012 and in the intervening years that the scheme was becoming incredibly expensive and could be manipulated without any real benefit to shareholders . And we are now in the position where the whole of last years profits are being appropriated for the incentive scheme of the top executives.

Spoiler alert.. Big investment companies vote with the board. (85 voted and 75% of those voted in favour). So that is about 62% which isn't an overwhelming vote in agreement.

Here is the letter that the UK Savings Association sent. You can note the points about excessive remuneration for just doing the job.

"UKSA notes the proposal for a new Long Term Investment Plan for the executives of Persimmon.

This plan is dependent on the company making large dividend payments over a number of years. The executives will be entitled to up to 10% of the company’s ordinary shares at a varying option price which at present is already around 18% below the market price. The notes issued with the notice of meeting do not make it clear why the remuneration committee regard this innovative proposal as being appropriate.

UKSA is concerned that the beneficiaries of this LTIP will be rewarded- in several cases very handsomely- for, in effect just doing their job, that of efficiently managing the company for the shareholders. Also the linkage with dividends does nothing to ensure that the assets are efficiently used. It may transpire that the criteria for being rewarded can be most easily met by simply running down the company’s extensive land bank, rather than by extraordinary performance in a company which has, in any case, been very successful without such a LTIP.

UKSA asks the company to think again. It needs to at least fully explain its reasoning for the proposed LTIP and also consider whether such a generous- and complicated- arrangement is really appropriate.

UKSA

16 Oct 2012"

The overall effect is that shareholdrers should have made more than they have. That is fine because as shareholders we collectively own the company and should be the people that primarily benefit from it and its profits.

I am happy the price has risen, but that price would have risen higher with a much more conservative LTIP in place.

[TooMany2cvs]

sugerbear said:

Good corporate governance isn't my responsibility as a shareholder, it's the responsibility of the board and non--executive directors.

Umm, shareholders appoint them and approve their actions.

sugerbear said:

Every person that invests in Persimmon pension has been robbed.

I'll be charitable and assume you mean "every person whose pension invests in Persimmon"...?
So perhaps they should push their pension fund managers, as large shareholders, to take action at the AGM?

sugerbear said:

Spoiler alert.. Big investment companies vote with the board. (85 voted and 75% of those voted in favour).

If, as you suggest, such schemes REDUCE the value to the shareholder, what possible benefit is there to those investors in doing so? Perhaps it's not quite as easy as you're suggesting?

[sugerbear]

TooMany2cvs said:

sugerbear said:

Good corporate governance isn't my responsibility as a shareholder, it's the responsibility of the board and non--executive directors.

Umm, shareholders appoint them and approve their actions.

sugerbear said:

Every person that invests in Persimmon pension has been robbed.

I'll be charitable and assume you mean "every person whose pension invests in Persimmon"...?
So perhaps they should push their pension fund managers, as large shareholders, to take action at the AGM?

sugerbear said:

Spoiler alert.. Big investment companies vote with the board. (85 voted and 75% of those voted in favour).

If, as you suggest, such schemes REDUCE the value to the shareholder, what possible benefit is there to those investors in doing so? Perhaps it's not quite as easy as you're suggesting?

The scheme has reduced and diluted the value of the shares by around approx 750 million. The sector has grown with the Persimmon, it hasn't outperformed the sector. Do you really expect the average investor to be pooring over company finances?

An appropriate constructed LTIP is a good thing, this one is stacked in favour of the directors.

Do take a look at the responses from the Chairman. He didn't see anything wrong or just avoided any difficult questions.

http://www.uksa.org.uk/sites/default/files/Persimm...

http://www.uksa.org.uk/sites/default/files/persimm...

You know that institutional investors side with the chairman, you cannot absolve him of his responsibility. There are very few small and activist investors and even those that are not able to overturn the large majority that votes with the chairman.

Yes the shares have also gone up, but there is a near guarantee they would have done without the LTIP in place or one that was more moderate given the rise in the sector overall. There should have been checks and balances within the LTIP. Performance against the sector, a cap on the total amount and a clawback option to avoid short termism to meet the conditions of the LTIP towards the end of the 10 years.

Do you really believe the Chairman would have resigned if it had been well put together?

[TooMany2cvs]

sugerbear said:

Do you really believe the Chairman would have resigned if it had been well put together?

He's just received a £100m bonus. It's not like he needs the stress of the office any more, is it?

[ClaphamGT3]

sugerbear said:

Long-winded, hand-wringing drivel

No one said Corporate Governance was the investors responsibility, what has been pointed out to you is that, as an investor, you should have done some due diligence on where you were putting your money.

This wasn't a particularly well thought through or constructed scheme and, as such, the chairman and the chairman of the RemCom have done the decent thing but, to put it really simply so that you can understand, no one has done anything illegal, no one has been robbed and nothing has happened that is anyone's business but the Persimmon shareholders and the board

[crankedup]

ClaphamGT3 said:

No one said Corporate Governance was the investors responsibility, what has been pointed out to you is that, as an investor, you should have done some due diligence on where you were putting your money.

This wasn't a particularly well thought through or constructed scheme and, as such, the chairman and the chairman of the RemCom have done the decent thing but, to put it really simply so that you can understand, no one has done anything illegal, no one has been robbed and nothing has happened that is anyone's business but the Persimmon shareholders and the board

Although in fairness once again the mechanisms of the market have been exposed and given more information and ammunition to political opponents. This continued and deepening perceived greed and self interest at the top of the Managements of FTSE businesses
could result in a Labour Government within the near future reigning in this perceived greed rather than the Companies themselves recognising and taking voluntary actions. Don’t get me wrong, I am not advocating it, merely suggesting the possibility based upon the evidence of growing unrest as reported within various media.

[PugwasHDJ80]

ClaphamGT3 said:

sugerbear said:

Long-winded, hand-wringing drivel

No one said Corporate Governance was the investors responsibility, what has been pointed out to you is that, as an investor, you should have done some due diligence on where you were putting your money.

This wasn't a particularly well thought through or constructed scheme and, as such, the chairman and the chairman of the RemCom have done the decent thing but, to put it really simply so that you can understand, no one has done anything illegal, no one has been robbed and nothing has happened that is anyone's business but the Persimmon shareholders and the board

Except that's not true when the market place is being supported by governmental spending.

Gotta love socialist pipe dreams.....

[ClaphamGT3]

PugwasHDJ80 said:

ClaphamGT3 said:

sugerbear said:

Long-winded, hand-wringing drivel

No one said Corporate Governance was the investors responsibility, what has been pointed out to you is that, as an investor, you should have done some due diligence on where you were putting your money.

This wasn't a particularly well thought through or constructed scheme and, as such, the chairman and the chairman of the RemCom have done the decent thing but, to put it really simply so that you can understand, no one has done anything illegal, no one has been robbed and nothing has happened that is anyone's business but the Persimmon shareholders and the board

Except that's not true when the market place is being supported by governmental spending.

Gotta love socialist pipe dreams.....

What part of it isn't true?

[Rovinghawk]

V8 Fettler said:

There's at least three different packing systems available to allow for misalignment of the foundations.

I've seen pilecaps broken out due to HD bolts being 5mm out of position. It's heartbreaking.

Offsite fabrication can be good but designers need to allow some form of tolerance.

[blueg33]

As a former Director of A Persimmon company and current main Board director of a volume but specialist house builder, there is so much on this thread that is wrong and misleading that I really don’t know where to start!

[ClaphamGT3]

blueg33 said:

As a former Director of A Persimmon company and current main Board director of a volume but specialist house builder, there is so much on this thread that is wrong and misleading that I really don’t know where to start!

ps off with yer poncey actually knowing what's going on ways, we don't want your sort round here, you filthy, land-banking grant-gouger

[blueg33]

ClaphamGT3 said:

ps off with yer poncey actually knowing what's going on ways, we don't want your sort round here, you filthy, land-banking grant-gouger

Oh how I dream of a massive consented Land bank, like the ones in the political fairy tales. I saw one once, it was a lovely greenfield with unicorns grazing and pigs circling in the skies.

[J4CKO]

It's 100 million quid, a ridiculous amount, just because you can doesn't mean you should.

I am sure he was already wealthy, how much do people actually need to be happy, why not spread a bit about with the rest of the workforce ? Maybe do some community projects ?

Capitalism is the only system shown to work, but it's rolling out of control. It is possible to be wealthy, have everything you need and not be like Philip Green, Rucher Sounds for example, that's an ethos I can get behind.

[James_B]

J4CKO said:

It's 100 million quid, a ridiculous amount, just because you can doesn't mean you should.

I am sure he was already wealthy, how much do people actually need to be happy, why not spread a bit about with the rest of the workforce ? Maybe do some community projects ?

Capitalism is the only system shown to work, but it's rolling out of control. It is possible to be wealthy, have everything you need and not be like Philip Green, Rucher Sounds for example, that's an ethos I can get behind.

But why does it bother you, how much someone else earns? If we get the odd outlier like this thrown up, what’s the actual problem? We’ve decreasing inequality, decreasing absolute poverty, increasing minimum wage, and a more progressive tax system than ten years ago, if the system also theirs up the occasional very high earners then why get exercised over it?

£100m is less than £1.50per person in the UK. It sounds like a lot, but what harm does it do?

[John145]

James_B said:

But why does it bother you, how much someone else earns? If we get the odd outlier like this thrown up, what’s the actual problem? We’ve decreasing inequality, decreasing absolute poverty, increasing minimum wage, and a more progressive tax system than ten years ago, if the system also theirs up the occasional very high earners then why get exercised over it?

£100m is less than £1.50per person in the UK. It sounds like a lot, but what harm does it do?

It’s £20,000 per employee. I wonder what kind of pay rise they saw. It’s very frustrating, in the business I just left they were making £30,000 profit after tax per employee yet gave a tiny 2% pay rise.

[sidicks]

John145 said:

It’s £20,000 per employee. I wonder what kind of pay rise they saw. It’s very frustrating, in the business I just left they were making £30,000 profit after tax per employee yet gave a tiny 2% pay rise.

Do the employees own the business?