Persimmon boss Jeff Fairburn to leave

[OLTB]

Morning all

It was the bonus what did it... news story https://news.sky.com/story/persimmon-bo ... w-11546917 and will leave at the end of the year.

Cheers, OLTB.

[daveh]

Fired by mutual agreement, but he keeps is £75m bonus

www.investegate.co.uk/article.aspx?id=2 ... 5936G&fe=1

[Dod101]

How very odd. It should have been the Remuneration Committee that was removed. Maybe Fairburn should have refused to take the bonus at all but he did not make up the rules, I assume and I am sure there is no way the company could force a recovery of the bonus. As the article says, not only is he keeping his bonus he is getting his share options as well.

Anyway I do not hold Persimmon so it will affect me in any way.

Dod

[daveh]

How very odd. It should have been the Remuneration Committee that was removed. Maybe Fairburn should have refused to take the bonus at all but he did not make up the rules, I assume and I am sure there is no way the company could force a recovery of the bonus. As the article says, not only is he keeping his bonus he is getting his share options as well.

Anyway I do not hold Persimmon so it will affect me in any way.

Dod

I thought the remuneration committee had already resigned - when the CEO accepted a reduction in bonus from £100m to £75m

[Dod101]

Maybe they did. I really do not follow this very closely, but it still seems a bit odd that they company should in effect sack him for their lack of foresight. However it will be no hardship to him I am sure.

Dod

[jackdaww]

i wont touch these outrageous fat cat outfits with nodding remuneration committees.

possibly my loss but thats one of the lines i draw.

[Arborbridge]

i wont touch these outrageous fat cat outfits with nodding remuneration committees.

possibly my loss but thats one of the lines i draw.

Fat, Fatter, Fattest.

It's all a question of degree, and to mix metaphors, most in that position seem to me to have their snouts as far into the trough as they can manage.

Arb.

[Arborbridge]

Maybe they did. I really do not follow this very closely, but it still seems a bit odd that they company should in effect sack him for their lack of foresight. However it will be no hardship to him I am sure.

Dod

Would he have grounds for constructive dismissal? I can see him suing them. As you say, as far as we know he only took what his entitlement was - in fact less than that.
For fellow - he must have potentially lost tens of millions in future earnings.

Arb.

[monabri]

Would he have grounds for constructive dismissal? I can see him suing them. As you say, as far as we know he only took what his entitlement was - in fact less than that.
For fellow - he must have potentially lost tens of millions in future earnings.

Arb.

The same thought crossed my mind. After all, what did he do wrong legally ( we can debate the morals)? Indeed, in the 23 Feb 18 update, they say;

"The Board believes that the LTIP put in place in 2012 has been a significant factor in the Company's outstanding performance."

Source
https://www.londonstockexchange.com/exc ... 43296.html


Two members of the remuneration committee stepped down ..end of February.

https://www.londonstockexchange.com/exc ... 46609.html

"The Board announced the resignation of Jonathan Davie, together with Nicholas Wrigley's intention to resign, on 14 December 2017. ...........
The Board would like to thank both Jonathan and Nicholas for their long service to the Company and particularly to record its appreciation of their clear sense of accountability in recognising that the 2012 LTIP could have included a cap, the absence of which led them to tender their resignations."


I'd be surprised if he doesn't try to sue!

[WorldCupWilly]

Fired by mutual agreement, but he keeps is £75m bonus

http://www.investegate.co.uk/article.as ... 5936G&fe=1

Extract from link:

Roger Devlin, Persimmon's Chairman, said: "Under Jeff's leadership Persimmon has sold more than 74,000 homes across the UK while more than doubling in size, increasing its market capitalisation from £3.4 bn to £7.5 bn, returning over £2.2bn to shareholders and producing industry leading margins and returns on capital. However, given the continuing distraction around the scale of his remuneration resulting from the 2012 LTIP, the Board believes that it is now necessary for there to be to be a change of leadership. On behalf of the Board I would like to thank Jeff for his significant contribution to the business over a 29 year period.

Think its a bit rich that Roger didn't thank the taxpayer for providing half of these profits, Jeff's bonus and the fat dividends through the government's dim-witted Help to Buy scheme

WCW

[Dod101]

The link says 'by mutual agreement and at the request of the company'. It would seem that he has foregone any opportunity to sue them.

Dod

[Clitheroekid]

I am sure there is no way the company could force a recovery of the bonus.

As a Persimmon shareholder I was outraged by this profligate waste of the company's money, and there is an interesting legal argument that I'd considered taking up with them at the time.

This is based on a rather obscure company law case, Re Halt Garage (1964) Ltd [1982] 3 All ER 1016, and is posited on the basis that a payment described as remuneration that is "patently excessive and unreasonable" could be seen as a distribution of the company's capital.

Such a distribution would, of course, require shareholder approval, which in this case was neither requested nor given.

If it could be classified as an unauthorised distribution of capital then it would be theoretically possible for the company to require repayment on the grounds that the payment had been made illegally - i.e the original resolution authorising the payment was ultra vires because a company cannot legally approve an illegal act.

But in the end I decided that life was too short!

[Arborbridge]

The link says 'by mutual agreement and at the request of the company'. It would seem that he has foregone any opportunity to sue them.

Dod

I'd be surprised if that would stand: it was under duress.

[monabri]

I am sure there is no way the company could force a recovery of the bonus.

As a Persimmon shareholder I was outraged by this profligate waste of the company's money, and there is an interesting legal argument that I'd considered taking up with them at the time.

This is based on a rather obscure company law case, Re Halt Garage (1964) Ltd [1982] 3 All ER 1016, and is posited on the basis that a payment described as remuneration that is "patently excessive and unreasonable" could be seen as a distribution of the company's capital.

Such a distribution would, of course, require shareholder approval, which in this case was neither requested nor given.

If it could be classified as an unauthorised distribution of capital then it would be theoretically possible for the company to require repayment on the grounds that the payment had been made illegally - i.e the original resolution authorising the payment was ultra vires because a company cannot legally approve an illegal act.

But in the end I decided that life was too short!

And he's got 75 million reasons to defend it in court.

[Gengulphus]

This is based on a rather obscure company law case, Re Halt Garage (1964) Ltd [1982] 3 All ER 1016, and is posited on the basis that a payment described as remuneration that is "patently excessive and unreasonable" could be seen as a distribution of the company's capital.

Such a distribution would, of course, require shareholder approval, which in this case was neither requested nor given.

If it could be classified as an unauthorised distribution of capital then it would be theoretically possible for the company to require repayment on the grounds that the payment had been made illegally - i.e the original resolution authorising the payment was ultra vires because a company cannot legally approve an illegal act.

Are you certain about the bit I've emboldened? From monabri's link https://www.londonstockexchange.com/exc ... 43296.html:

"The Board of Persimmon announces amendments to the 2012 Long Term Incentive Plan ("2012 LTIP") entitlements for Jeff Fairburn, CEO, Mike Killoran, CFO, and Dave Jenkinson, Group Managing Director ("the Executives").

Under the terms of the 2012 LTIP, which was approved by 84.9% of shareholders voting at an EGM, rewards for the 133 participants ..."

So it appears that shareholder approval for the payments was both requested and given...

There is of course still the question of how explicit the request for approval has to be about the fact that it's a distribution of the company's capital. I.e. if shareholders approve a payment, is it relevant whether they didn't think at the time that it was a capital distribution, to the point of somehow invalidating the approval if they didn't?

Not saying you're wrong, but I suspect it's a good deal more complex than "which in this case was neither requested nor given" suggests...

Gengulphus

[Bouleversee]

I wonder what proportion of the total shareholders on the register the 84.9% of those voting at the meeting represented. Any way of finding out?

[Gengulphus]

I wonder what proportion of the total shareholders on the register the 84.9% of those voting at the meeting represented. Any way of finding out?

The proportion of registered shareholders, probably not - but I'm not certain what it would tell you anyway, as one registered shareholder can be a nominee representing many underlying beneficial shareholders, with them producing a mixture of votes for, votes against, votes withheld and not voting at all (the last two being equivalent, but votes withheld are generally reported when companies report meeting results and failures to vote at all being disregarded entirely).

The proportion of registered shares voted in favour, yes, that can often be worked out pretty accurately by tracking down the meeting results report RNS and a "Total Voting Rights" RNS or something that similarly reports the number of shares in issue from close to the same date. In this case, the meeting report RNS gives the shares voted in favour as 185,254,097, the nearest preceding reported shares in issue figure is 302,738,957 and the next following reported shares in issue figure is also 302,738,957. So 185,254,097/302,738,957 = 61.19% of the shares in issue were voted in favour of the LTIP in 2012.

Gengulphus

[Bouleversee]

I wonder what proportion of the total shareholders on the register the 84.9% of those voting at the meeting represented. Any way of finding out?

The proportion of registered shareholders, probably not - but I'm not certain what it would tell you anyway, as one registered shareholder can be a nominee representing many underlying beneficial shareholders, with them producing a mixture of votes for, votes against, votes withheld and not voting at all (the last two being equivalent, but votes withheld are generally reported when companies report meeting results and failures to vote at all being disregarded entirely).

The proportion of registered shares voted in favour, yes, that can often be worked out pretty accurately by tracking down the meeting results report RNS and a "Total Voting Rights" RNS or something that similarly reports the number of shares in issue from close to the same date. In this case, the meeting report RNS gives the shares voted in favour as 185,254,097, the nearest preceding reported shares in issue figure is 302,738,957 and the next following reported shares in issue figure is also 302,738,957. So 185,254,097/302,738,957 = 61.19% of the shares in issue were voted in favour of the LTIP in 2012.

Gengulphus

Thank you, Geng. I am still trying to get my feeble brain round all that. At the meeting it is the number of hands that are counted, not the no. of shares those hands represent (how could they know?) , but with the proxy votes am I to understand it is the no. of shares rather than shareholders which are counted, which would not seem to make sense as it would be mixing apples with pears?

One could debate whether it is fairer to count voters/hands or numbers of shares voted but I don't suppose this is the place.

[Gengulphus]

I believe the normal procedure at shareholder meetings is to pass (or rarely, not pass) shareholders' resolutions on a show of hands, but any shareholder attending the meeting can demand that a poll is taken instead (though I suspect the details might vary from company to company, e.g. about whether any one shareholder can make the demand on their own or whether they need a seconder - I'd guess the exact answer can generally be found in the company's Articles of Association). Basically, a poll is much more cumbersome, so there's got to be some reason for a shareholder attending the meeting to believe the attendees are not representative of the voting. The normal situation is that resolutions pass overwhelmingly, so this saves a lot of time, especially at AGMs when there might be 15-25 resolutions to get through...

There may well be possibilities for that sort of arrangement to go wrong, especially for small companies with low attendance at their meetings. But I'd be very doubtful in the case of controversial votes, especially for larger companies.

Gengulphus

[Bouleversee]

Thanks again, but you didn't really answer my question as to whether I had understood it correctly or not?