In February, executives agreed to slice £50m of their pay packages in order to keep shareholders on side, but they still face huge windfalls from the company’s long-term incentive plan.
Chief executive Jeff Fairburn agreed to cut about £25m of his £99m pay package, chief financial officer Mike Killoran pledged to give back £24m of his £78m payout and managing director Dave Jenkinson pledged to give back £2.5m of £40m.
RLAM told Portfolio Adviser it would vote against the remuneration report, including Fairburn’s pay package. RLAM holds 0.48% of Persimmon, worth more than £40m.
Head of responsible investment Ashley Hamilton Claxton (pictured) said RLAM also voted against the report last year.
“We have maintained the view that the pay scheme should have been capped, or at the very least, the board should have applied some discretion to reduce the pay outs to executives given the government support to the sector from Help to Buy,” Claxton said.
Legal & General Investment Management, Hermes Investment Management and Aberdeen Standard Investments all declined to comment on their voting intentions over the pay report.
Separately, Shareaction is leading several pension funds to challenge the housebuilder over its failure to pay many of its staff, including contractors, the so-called living wage.
RLAM will still vote in favour of re-election of members to the remuneration committee. Claxton said RLAM felt directors were taking shareholder feedback seriously.
In its corporate governance review for 2017, LGIM said it voted against 215 resolutions at UK companies. “However, we have not yet seen any significant gains for the pay of the median employee, which highlights the need for more work in this area,” the report, Active ownership, said.
It noted Anglo American, BP, Burberry, GlaxoSmithKline, Reckitt Benckiser and the Royal Bank of Scotland had all reduced executive pay.
Aberdeen Standard Investments said it does not comment on voting intentions in the lead up to AGMs.
Architas investment director Adrian Lowcock said pay packages were likely to come under increasing scrutiny by asset managers as an environmental, social and governance (ESG) investment approach pervades the industry.
“But it may be a slow change. It’s still a competitive environment. If you don’t pay your chief executive a competitive package then they will go off somewhere else,” Lowcock said.
However, he added Fairburn’s pay was particularly high.
Pay inequality
Meanwhile, Shareaction has said it will “interrogate” Fairburn over pay inequality at the company AGM and call for Persimmon to become accredited as a Living Wage employer.
It is backed by the £21bn Strathclyde Pension Fund and the £2.7bn National Employment Savings Trust (Nest).
Shareaction says Fairburn’s bonus could support 4,100 full-time staff at the Living Wage rate for outside of London. The Living Wage for London is £10.20 per hour and £8.75 for outside London.
“That sort of inequality is indefensible. Persimmon relies on the hard work of its builders and yet it’s the executives who profit,” said Shareaction AGM activist Clem McCulloch.
Strathclyde Pension Fund investment manager Richard Keery said there is a “compelling investment case” behind the long-term benefits of the Living Wage.
“It is fundamental that companies within the FTSE 100 are able to demonstrate responsible business practice and the fair treatment of staff,” Keery said.
