The bonuses under dispute form part of Persimmon’s long-term incentive plan established in 2012. In February, executives agreed to slice £50m of their pay packages following increasing backlash from shareholders, with chief executive Jeff Fairburn agreeing to a £35m cut.
Stirling said Fairburn’s pay reduction from £110m to £75m “does not even get close to acceptable”.
The asset management arm of Standard Life Aberdeen owns 7.1 million shares in the UK housebuilder on behalf of its clients, representing a 2.3% stake.
Stirling told the AGM the “long-term success of the company is being endangered by the reputational damage associated with grossly excessive pay”.
Stirling said being a chief executive or company director requires more than technical and managerial expertise.
“It requires a personal motivation that goes beyond simply amassing a fortune. It requires an understanding of where the company sits within the society within which it operates. Little of that is evident currently at Persimmon.”
Stirling went on to say that Persimmon’s executive pay practices are inviting “external attention” from politicians and regulators “who create bureaucracy and obstacles to value generation”.
He added changes in board personnel in recent months were “necessary and positive” and acknowledged the “enormous efforts” of non-executive directors to improve the current situation.
“However, we remain very keen to hear the board’s explanation as to how, in the current situation, it is fulfilling its legal obligation to promote the long term success of the company, taking into account all stakeholders.”
Silence from shareholders
On Tuesday, Royal London Asset Management revealed to Portfolio Adviser that it was planning to vote against the remuneration report, including Fairburn’s pay.
However, other interested shareholders, including Legal & General Investment Management and Hermes Investment Management, remained tight lipped about which way they were voting ahead of the AGM.
Portfolio Adviser followed-up with LGIM, which owns a 2.18% stake in Persimmon worth 6.77 million shares, and Hermes on Wednesday but both asset managers declined to comment.