Persimmon Homes -- CEO £100m Bonus...

Persimmon Homes -- CEO £100m Bonus...

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Discussion

ATG

20,485 posts

271 months

Saturday 16th December 2017
quotequote all
Goggle is a company and Ashcroft is non-dom. Persimmon bloke is neither.

paulrockliffe

15,639 posts

226 months

Saturday 16th December 2017
quotequote all
Slightly different perspective; the Government should have recognised the distorting effect of the scheme and added some strings to the Help to Buy scheme to stop houses under the scheme being included in bonus calculations.

crankedup

25,764 posts

242 months

Saturday 16th December 2017
quotequote all
paulrockliffe said:
Slightly different perspective; the Government should have recognised the distorting effect of the scheme and added some strings to the Help to Buy scheme to stop houses under the scheme being included in bonus calculations.
But how much Government interference should be tolerated in what is supposed to be a free market?

TooMany2cvs

29,008 posts

125 months

Saturday 16th December 2017
quotequote all
leef44 said:
Google is an example. Very publically known. Do you see them paying 21% corporation tax.
Woah, hold on a minute...

Google's European hq is not in the UK, so they simply don't account for most of their European profits in the UK, which is why they don't pay UK corporation tax on most of their European income. It's an Irish company, so they pay Irish corporation tax.
For 2017, they paid €164m Irish corporation tax on €1.18m profits declared in Ireland on €26.3bn revenue. Corporation tax in Ireland is 12.5% on trading income, 25% on non-trading. They paid a total of just under 14% in total.

Google do have a UK trading company, which for 2016 declared profits of £148.8m from £1bn revenue, and they paid tax of £36.4m -
24.4%, because of various other adjustments.

Persimmon is a UK company. For 2016, they declared £3.14bn revenue, £774.8m profit, on which they paid £149.5m corp tax. That's only 19.3%, because of various adjustments.
https://www.persimmonhomes.com/corporate/media/314...
https://www.persimmonhomes.com/corporate/media/304...

TooMany2cvs

29,008 posts

125 months

Saturday 16th December 2017
quotequote all
crankedup said:
in this particular case the shareholders are not amused by this complete and utter shambles.
Then let 'em express that lack of amusement at the AGM. It's what it's for.

crankedup

25,764 posts

242 months

Saturday 16th December 2017
quotequote all
TooMany2cvs said:
crankedup said:
in this particular case the shareholders are not amused by this complete and utter shambles.
Then let 'em express that lack of amusement at the AGM. It's what it's for.
You can be absolutely sure that they will do so, meanwhile private musings have been underway, hence the resignation of the Chairman,the shareholders may seek redress at a later date but this remains to be seen.

leef44

4,359 posts

152 months

Saturday 16th December 2017
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nyxster said:
sidicks said:
rofl
Please explain what 'tax loopholes' are available to 'squirrel away' £100m from HMRC when this payment is publicly available information!!
What's with the constant 'please explain' requests fella? Are you incapable of using google? Eric has already pointed out to you that by moving it into a CGT scheme tax isn't payable until the gain is crystalised, regardless of the ampunt being public or private if the beneficiary isn't a UK tax resident when the gain is crystalised then even if the gain is derived in the UK through the use of dual-taxation agreements and residency in a low/no CGT tax jurasdiction like Monaco or certain Swiss cantons tax can be deferred and then legally avoided. The shares could also be paid into an offshore trust as Bernie Ecclestone did which would shelter it from tax and then 'lent' to a beneficiary in the form of loans.

Everyone from Bernie Ecclestone to Philip Green have had publicly known fortunes that have been structured in legal tax avoidance / mitigation schemes. It is fairly standard advice to defer money into a CGT gain then move into a low/no tax locale before liquidating it.

Did you miss the Panama papers et al? It's not exactly news that KPMG et al have structured countless tax avoidance/mitigation schemes that enable the wealthy elect to pay tax or not.

But in a simple scheme:
Company gives me a contractual right to buy shares at 500p that are currently worth 1000p in 2021. Since it is only an option to purchase I don't pay any tax as no money has changed hands. I leave the company and move to Monaco where I pay 0 percent CGT and am no longer a UK taxpayer. I exercise the option and buy 100m in shares for 50m, immediately sell them and make 50m in capital gain. The transaction occurs when I'm resident in Monaco I've gained 50m tax free. The HMRC can make no claim as it wasn't paye income - i bought the shares albeit at a preferential rate before selling them. There may be tax obligations to close this loophole where the options margin is taxable on issue (as in the US) however there are various schemes like restricted stock units, convertible class shares that can avoid this, as well as more complicated arrangements using offshore trusts etc - if you'd like a current worked example based on the current rules go and ask a tax advisor.

it's not like they just chuck 100m into his monthly pay, the whole scheme will be designed to be as tax beneficial as possible for both the company and individual beneficiaries.
thank you, that's the point I was trying to make but not doing it very well.

paulrockliffe

15,639 posts

226 months

Saturday 16th December 2017
quotequote all
crankedup said:
paulrockliffe said:
Slightly different perspective; the Government should have recognised the distorting effect of the scheme and added some strings to the Help to Buy scheme to stop houses under the scheme being included in bonus calculations.
But how much Government interference should be tolerated in what is supposed to be a free market?
It's not a free market when the Government is pumping Help to Buy money in. I'm not talking about interference in the market, just make sure help to buy funds don't effectively end up being paid as a bonus where the profits are a result of help to buy rather than the actions of the company.

nyxster

1,452 posts

170 months

Saturday 16th December 2017
quotequote all
sidicks said:
nyxster said:
What's with the constant 'please explain' requests fella? Are you incapable of using google? Eric has already pointed out to you that by moving it into a CGT scheme tax isn't payable until the gain is crystalised, regardless of the ampunt being public or private if the beneficiary isn't a UK tax resident when the gain is crystalised then even if the gain is derived in the UK through the use of dual-taxation agreements and residency in a low/no CGT tax jurasdiction like Monaco or certain Swiss cantons tax can be deferred and then legally avoided.

The shares could also be paid into an offshore trust as Bernie Ecclestone did which would shelter it from tax and then 'lent' to a beneficiary in the form of loans.

Everyone from Bernie Ecclestone to Philip Green have had publicly known fortunes that have been structured in legal tax avoidance / mitigation schemes. It is fairly standard advice to defer money into a CGT gain then move into a low/no tax locale before liquidating it.

Did you miss the Panama papers et al? It's not exactly news that KPMG et al have structured countless tax avoidance/mitigation schemes that enable the wealthy elect to pay tax or not.


But in a simple scheme:
Company gives me a contractual right to buy shares at 500p that are currently worth 1000p in 2021. Since it is only an option to purchase I don't pay any tax as no money has changed hands. I leave the company and move to Monaco where I pay 0 percent CGT and am no longer a UK taxpayer. I exercise the option and buy 100m in shares for 50m, immediately sell them and make 50m in capital gain. The transaction occurs when I'm resident in Monaco I've gained 50m tax free. The HMRC can make no claim as it wasn't paye income - i bought the shares albeit at a preferential rate before selling them. There may be tax obligations to close this loophole where the options margin is taxable on issue (as in the US) however there are various schemes like restricted stock units, convertible class shares that can avoid this, as well as more complicated arrangements using offshore trusts etc - if you'd like a current worked example based on the current rules go and ask a tax advisor.

it's not like they just chuck 100m into his monthly pay, the whole scheme will be designed to be as tax beneficial as possible for both the company and individual beneficiaries.
So there is no tax due on the value of those options granted? That's certainly not my experience.
if there is then the tax practitioner who advised on the scheme didn't do their job, after options issues became taxable, schemes were moved into other instruments like restricted stock units or convertible notes that mitigated the gain by disconnecting it from the traded stock value at issue - facebook had to do this as at the time of the IPO as the liability was so high and due to lock ins the tax bills would have bankrupted the employees as they couldn't sell shares to pay the tax due on holding options, in that case facebook paid their employees tax bills and offset it against their corporate tax liability rendering it tax neutral, subsequent companies have schemes using restricted stock units or different share classes to avoid a large capital gain liability on issue. Any big 4 tax practitioner will likely have an up to date template scheme that avoids or mitigates tax on issue - thats what their tax consultancies make money from. You are a bit naieve if you think with 100's of millions at stake the tax firms aren't generating huge fees based on their abilty to work around the rules to the benefit of the company and employees.

if you want detailed answers on how current schemes work I suggest you go and read advisory notes on current tax efficient company share schemes from tax firms not ask on here, the point stands - they won't pay tax due on 100m because he would need to sell shares to do it and insider trading rules means he'll be locked in and restricted from dumping stock, so either the company has to pay his tax bill or structure to avoid triggering it.


sidicks

25,218 posts

220 months

Saturday 16th December 2017
quotequote all
nyxster said:
if there is then the tax practitioner who advised on the scheme didn't do their job, after options issues became taxable, schemes were moved into other instruments like restricted stock units or convertible notes that mitigated the gain by disconnecting it from the traded stock value at issue - facebook had to do this as at the time of the IPO as the liability was so high and due to lock ins the tax bills would have bankrupted the employees as they couldn't sell shares to pay the tax due on holding options, in that case facebook paid their employees tax bills and offset it against their corporate tax liability rendering it tax neutral, subsequent companies have schemes using restricted stock units or different share classes to avoid a large capital gain liability on issue. Any big 4 tax practitioner will likely have an up to date template scheme that avoids or mitigates tax on issue - thats what their tax consultancies make money from. You are a bit naieve if you think with 100's of millions at stake the tax firms aren't generating huge fees based on their abilty to work around the rules to the benefit of the company and employees.

if you want detailed answers on how current schemes work I suggest you go and read advisory notes on current tax efficient company share schemes from tax firms not ask on here, the point stands - they won't pay tax due on 100m because he would need to sell shares to do it and insider trading rules means he'll be locked in and restricted from dumping stock, so either the company has to pay his tax bill or structure to avoid triggering it.
You're a bit naive if you think the employees of banks and financial services companies don't pay massive amounts of tax on bonuses received in the form of shares.


vonuber

17,868 posts

164 months

Saturday 16th December 2017
quotequote all
sidicks what's your personal opinion on the rights and wrongs of this? Nothing to see here, doubles all round?

sidicks

25,218 posts

220 months

Saturday 16th December 2017
quotequote all
vonuber said:
sidicks what's your personal opinion on the rights and wrongs of this? Nothing to see here, doubles all round?
The government should have been more careful about the rules of the schemes that supported homebuilders. Shareholders have benefitted massively in terms of share price appreciation.

It's up to the Shareholders to determine whether the remuneration policy is appropriate, and if not, act accordingly.

You'd like to think that the CEO would be a bit more aware and promise to use a proportion of his gains to support good causes etc.

crankedup

25,764 posts

242 months

Saturday 16th December 2017
quotequote all
paulrockliffe said:
crankedup said:
paulrockliffe said:
Slightly different perspective; the Government should have recognised the distorting effect of the scheme and added some strings to the Help to Buy scheme to stop houses under the scheme being included in bonus calculations.
But how much Government interference should be tolerated in what is supposed to be a free market?
It's not a free market when the Government is pumping Help to Buy money in. I'm not talking about interference in the market, just make sure help to buy funds don't effectively end up being paid as a bonus where the profits are a result of help to buy rather than the actions of the company.
Yup agreed, and these house builders have effectively used the Government scheme to rebuild thier balance sheets and resulted in the vast sum of money directed to a few of the Companies staff.

nyxster

1,452 posts

170 months

Saturday 16th December 2017
quotequote all
sidicks said:
nyxster said:
if there is then the tax practitioner who advised on the scheme didn't do their job, after options issues became taxable, schemes were moved into other instruments like restricted stock units or convertible notes that mitigated the gain by disconnecting it from the traded stock value at issue - facebook had to do this as at the time of the IPO as the liability was so high and due to lock ins the tax bills would have bankrupted the employees as they couldn't sell shares to pay the tax due on holding options, in that case facebook paid their employees tax bills and offset it against their corporate tax liability rendering it tax neutral, subsequent companies have schemes using restricted stock units or different share classes to avoid a large capital gain liability on issue. Any big 4 tax practitioner will likely have an up to date template scheme that avoids or mitigates tax on issue - thats what their tax consultancies make money from. You are a bit naieve if you think with 100's of millions at stake the tax firms aren't generating huge fees based on their abilty to work around the rules to the benefit of the company and employees.

if you want detailed answers on how current schemes work I suggest you go and read advisory notes on current tax efficient company share schemes from tax firms not ask on here, the point stands - they won't pay tax due on 100m because he would need to sell shares to do it and insider trading rules means he'll be locked in and restricted from dumping stock, so either the company has to pay his tax bill or structure to avoid triggering it.
You're a bit naive if you think the employees of banks and financial services companies don't pay massive amounts of tax on bonuses received in the form of shares.
of course they are paying tax and nics - they are uk domiciled taxpayers and are likely to remain so. Someone with 100m net worth may elect to change tax domicile to preserve 50m of their wealth upon retirement and therefore negotiate a better structured deal as part of their contract - Steve Jobs and Mark Zuckerberg both took 1 USD salaries and were/are renumerated in stock. Both borrowed to buy houses rather than triggering tax liabilities to pay cash. We're not talking about normal taxpayers here but extremely wealthy people with the power over decisions to set the rules to benefit them. If you don't think this is going on precisely what do you think the big tax consultancies like KPMG et al do all day? They don't need rafts of experts to calculate paye and nics - I'm sure Eric could do that for them for a fraction of the price...hehe

I don't know the specific details of their scheme, only that generally most payouts of that magnitude will want to avoid paye/nics otherwise they might as well just settle the bonus in cash as the triggered tax liability would force a huge share sale which generally with lock-ins schemes try and avoid. its not like he's suddenly got 100m in cash to pay tax with, he's got 100m in shares that he probably can't sell due to restricted trading rules and could be worth less when he does sell them therefore they have to be structured a certain way to avoid a tax liability you wouldn't have the cash to pay for holding a security you may be prohibited from selling.





vonuber

17,868 posts

164 months

Saturday 16th December 2017
quotequote all
sidicks said:
The government should have been more careful about the rules of the schemes that supported homebuilders. Shareholders have benefitted massively in terms of share price appreciation.

It's up to the Shareholders to determine whether the remuneration policy is appropriate, and if not, act accordingly.

You'd like to think that the CEO would be a bit more aware and promise to use a proportion of his gains to support good causes etc.
So you see nothing wrong?

sidicks

25,218 posts

220 months

Saturday 16th December 2017
quotequote all
vonuber said:
So you see nothing wrong?
Nothing wrong in what way?

A private company can pay their staff what they want. Surely it's up to the shareholders to decide whether this is appropriate or not?

crankedup

25,764 posts

242 months

Saturday 16th December 2017
quotequote all
It’s precisely this mega money bonus bonanza at the top of many listed businesses that is driving the so called ‘great divide’ and the emergence of Momemtom The only people who will pay for all of this madness is ordinary folk, most on PAYE. Corbyn and his sidekick have a foot in the door already.
Perhaps a statement from the financial benefactors demonstrating a little awareness would go a long way. Not holding my breath though for that to come along.

vonuber

17,868 posts

164 months

Saturday 16th December 2017
quotequote all
sidicks said:
Nothing wrong in what way?

A private company can pay their staff what they want. Surely it's up to the shareholders to decide whether this is appropriate or not?
I'm asking your opinion here - you do not see anything wrong or if it is inappropriate- as it is a private company, in your eyes this is a non story?

ClaphamGT3

11,269 posts

242 months

Saturday 16th December 2017
quotequote all
There is nothing wrong with what has been done in the sense that executive remuneration is an issue between the shareholders and the executives.

In this instance I can see why (a) the shareholders might feel that the remcom representing their interests was asleep at the wheel (although it is questionable whether they could have foreseen the rapid bounce back in the housing market that gave this outcome) and (b) both Persimmon and the individual directors showed a lack of judgement in not voluntarily adjusting the scheme

TooMany2cvs

29,008 posts

125 months

Saturday 16th December 2017
quotequote all
crankedup said:
It’s precisely this mega money bonus bonanza at the top of many listed businesses that is driving the so called ‘great divide’ and the emergence of Momemtom The only people who will pay for all of this madness is ordinary folk, most on PAYE. Corbyn and his sidekick have a foot in the door already.
Perhaps a statement from the financial benefactors demonstrating a little awareness would go a long way. Not holding my breath though for that to come along.
Persimmon turned over £3bn+.
They made £775m - that's 25% margin.
If they hadn't paid £100m bonus, that'd be £875m - 28% margin. But you'd be happier, right?

Each share paid £1.35 dividend, a total of £625m. If they'd distributed that extra £100m to shareholders, instead of as a bonus to the CEO, the dividend would have been £1.56 instead. Does that satisfy your sense of morality?