Jeff Fairburn, now ex Boss of housebuilder Persimmon who has already given up a huge part of the bonus he earned legally, via a scheme awarded with the blessing of the companies shareholders back in 2012, is still facing criticism over the matter. The issue now is that he decided to keep the shares which were most beneficial to him from the options awarded – these options based on performance targets, which the company met under his leadership.
The Problem now seems to be that the ex-Persimmon boss said he would forego half his share options – but that bastion of transparency and fair play the BBC have (at license payers expense) carried out some analysis which indicates his action only brought the bonus down from £100m to £75m. If he had done it differently it would have been down to £60m. The fact that this money will remain with the company and ultimately its shareholders and is not for any public good seems to be irrelevant to them. Conflict of interest anyone?
Now we appreciate it is a big bonus – probably one of the largest in corporate history (outside of the Banking & Finance world anyway), however, it was all legally earned and back in 2012 when the company wasn’t doing that well 85% of the shareholders approved the scheme. In the ensuing 8 years, the share price of the company has risen exponentially from well below £5 to £23.84 on Friday has been over £29 a share this year. Also during his tenure somewhere around £2.2Bn has been returned to shareholders and despite this, the shares still have a yield of 9.85%. However, despite having made such a tremendous return, at the firm’s annual meeting in April, 48.5% of investors voted against the remuneration. Talk about ungrateful.
The main issue apart from jealousy and self-interest seems to be that the company did well because of low-interest rates – although interest rates were at 0.5% in 2009 and remained unchanged until into 2017 so much for that theory, and the Government House buying incentive scheme which undoubtedly helped boost demand – but was not exclusively available to Persimmon. These economic influences still had to be turned into profits and given the UK has a property shortage this boost in construction should be applauded rather than vilified.
To put this into some perspective, when a hedge fund manager – who creates nothing but makes money by exploiting market loopholes or circumstances (thing George Soros who made an estimated $1bn betting against Sterling in 1992 when we crashed out of the Exchange Rate Mechanism) makes a fortune they are classed as heroes and geniuses. When Jeff Fairburn makes a fortune and creates this by providing badly needed social infrastructure he is treated like a scoundrel. Sadly it seems to be a favourite media habit, demeaning and vilifying success.
Differing opinions here
