“Pressure” on fat cat pay (including Persimmon)

“The UK’s biggest companies are facing pressure to impose caps on bosses’ pay as part of recommendations to tackle “corporate greed”.

The report by the business, energy and industrial strategy committee of MPs highlighted “huge differentials” in awards at top firms following a string of pay rows, such as those at Unilever and BT.

The most high profile was a backlash against £85m for Jeff Fairburn when he led housebuilder Persimmon – a reward that ultimately led to him being forced out of the door.

MPs argue it is time to break what they regard as a heavy reliance on overgenerous, incentive-based executive pay that is deliberately made complex to shake off shareholder opposition.

The report says failing remuneration committees should face action from the regulator formed to replace the Financial Reporting Council, which has been ridiculed by the committee for its role in the collapse of Carillion.

It said the new Audit, Reporting and Governance Authority must be “more robust and proactive in bearing down on excessive executive pay”.

The MPs recommended pay committees “set, publish and explain” an absolute cap on pay for executives in any financial year.”

https://news.sky.com/story/mps-demand-executive-pay-caps-and-profit-sharing-to-tackle-greed-11675321

Exmouth: Agreement with Grenadier finally signed!

Note that, according to recent reports, Grenadier MUST begin construction within FIVE DAYS of the road being completed (current estimate for completion 19 June 2019).

Presumably, if it is not started within 5 days the contract can be voided …

And also presumably (since we will never be allowed to see the contract) EDDC will be following new government guidelines following the collapse of Carillion and the problems at Interserve, by having a “legacy plan” in case the contractor cannot fulfil the contract for any reason.

http://eastdevon.gov.uk/news/2019/03/agreement-signed-for-new-watersports-centre-in-exmouth/

“Persimmon bosses paid another £90m: Trio pocket £193m in just two years”

“Three Persimmon bosses have been paid nearly £200m in just two years as they cash in on Help to Buy.

Jeff Fairburn, Dave Jenkinson and Mike Killoran were handed £90m last year as the housebuilder racked up record profits of £1.1 billion.

That followed awards of £102.8m in 2017, taking their total earnings over the period to £192.8m.

Critics branded the ‘egregious’ payouts – which were disclosed in the company’s annual report – as ‘completely inappropriate’.

Persimmon has faced a fierce backlash over the rewards, which stem from a generous bonus scheme set up in 2012. The builder has also been criticised for shoddy workmanship and the sale of homes with rip-off leases.

Persimmon has benefited from the Government’s Help to Buy mortgage scheme that offers families loans from the taxpayer so they can secure a mortgage. Nearly half of the 16,449 homes it built last year were sold through Help to Buy as Persimmon cashed in on the subsidy.

The pay row, however, cost Fairburn his job. The 52-year-old – who was handed £45.7m in 2017 and a further £39m in 2018 – was forced out at the end of last year as Persimmon sought to draw a line under the scandal.

Chairman Roger Devlin, brought in to repair the company’s battered reputation, promoted Jenkinson to replace Fairburn.

In a bid to draw a line under the row, Jenkinson’s salary was held at £515,000, the same as when he was managing director, and he has agreed not to take a bonus this year. But the 51-year-old was paid £20.4m in 2017 and £25m last year, according to the annual report. Finance director Killoran, 56, was handed £36.7m in 2017 and £26m in 2018.

Sources at the company pointed out that these payouts dated back to the 2012 bonus scheme and would not be repeated.

And writing in the annual report, Devlin said the builder was transforming the way it behaved: ‘We are changing our pay and incentives to include greater emphasis on both quality and customer care with plans that are more rigorous than we have had in the past.’

But Luke Hildyard, director of the High Pay Centre, said: ‘These egregious pay outs are completely inappropriate.

‘They are a massive embarrassment for the company and really ought to be an embarrassment for the individuals as well.

‘It shows a total failure of corporate governance.

‘This view that a few top executives need these vast payments lavished upon them in order to get out of bed in the morning is worrying and damming of the culture at the business.

‘The company has tried to draw a line under this and this is the result of past practices. But it continues to cause damage.’

Labour MP John Mann, a member of the Treasury Select Committee, said: ‘These vast sums of money will rightly disgust homebuyers struggling to get on the ladder. They suggest once again that housebuilders’ profits – and pay packets – are out of control.’

https://www.dailymail.co.uk/money/markets/article-6823425/Persimmon-bosses-paid-90m-Trio-pocket-193m-just-two-years.html

“Shadow state” part 2

To be read with the chilling post below. When The Guardian AND The Times agree, something is DEFINITELY going wrong!

“The government has been accused of “irresponsibility” as it emerged that Interserve won £660 million worth of public contracts as it slid into a financial crisis that led to its collapse into administration last week.

Analysis of government projects has revealed that the outsourcing giant was handed public jobs worth £432 million in 2017 and £233 million last year. The deals were awarded even while it advised investors of its financial problems.

On Friday the parent company of the key government contractor entered administration after its largest shareholder, a US hedge fund, blocked a rescue deal. It was immediately bought out by lenders, wiping out shareholders and leading to uncertainty for its workforce. Interserve had annual revenues of £2.9 billion but a move into building energy-from-waste incinerators went awry. It cost the business £280 million and its share price collapsed.

Research by Tussell, a data analytics provider specialising in government contracting, shows that the company continued to win lucrative jobs. For example, the Foreign and Commonwealth Office awarded Interserve £66 million for facilities management services in July. The company had issued profit warnings in May 2016 and twice in 2017. Since it began lining up a rescue deal in December, it had won £6 million of taxpayer-funded work.

Interserve is one of Britain’s leading providers of privatised public sector services, with 45,000 workers maintaining and cleaning schools, hospitals, railway stations, government departments, armed forces facilities and job centres. The rapid “pre-pack” sale of the company to its lenders has allowed its operating subsidiaries to continue trading with customers and suppliers.

A spokesman for the Cabinet Office said: “The awarding of contracts follows a robust process, including financial checks.”

Source: Times (pay wall)