Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 7, 2018 12:38:49 GMT
A rather large pay packet and a bonus on the insensitive side of obscene will not exactly quiet the screaming "we want-ers". Apart from someone leaking the figure to the media, Why should a company listen or worry what folk think?
|
|
|
|
Post by Big Blue on Nov 7, 2018 12:46:22 GMT
I think the issue was that Persimmon were perceived to have benefitted from the Help to Buy programme so an element of his remuneration could be seen to be at the expense of the taxpayer. Given that their share value has doubled in 5 years under him and that the last three dividends paid out have been 100p, 25p and 125p respectively I don't think any shareholders were calling for him to go.
It's a PR exercise, no more no less.
|
|
|
|
Post by Tim on Nov 7, 2018 13:31:16 GMT
The problem appears to have been caused by the failure to have a cap written intot eh bonus scheme.
There will also be an element of unfairness in that him and the top 3 or 4 managers were getting these huge amounts of money but I imagine the next tier down got significantly less and so on reducing down the line.
|
|
|
|
Post by ChrisM on Nov 7, 2018 13:44:04 GMT
There will also be an element of unfairness ..... Nothing new here then. The rich get richer whilst the poor get poorer. IMHO it is obscene then those at the top, who depend on those lower down, milk a company for all they can get. |
|
|
|
Post by Big Blue on Nov 7, 2018 13:50:15 GMT
I never met a poor builder on a housebuilding site: they're either out of work (in which case there are no bonuses for management either) or coining it in.
|
|
|
|
Post by johnc on Nov 7, 2018 14:58:02 GMT
The Board probably thought it was a small price to pay for the increased profitability and share price and maybe never contemplated that he would be so successful. They probably did their calculations on 10% - 20% of what he actually received. I agree that a limit to the bonus might have been more appropriate but there is always the argument that he wouldn't put in as much effort once on maximum bonus.
I agree it's an obscene amount of money and perhaps the Scandinavian model might be more appropriate, where the boss's total remuneration can't be more than a certain multiple of average wages in the company (I think it's 35 times)
Let's hope the company doesn't now do an RBS and implode with the top man walking away with untold riches. |
|
|
|
Post by Tim on Nov 8, 2018 9:28:35 GMT
David Jenkinson, the guy who is taking over the CEO role, has been promoted internally and he's part of the same scheme, however in his defence he agreed to take a £2.5M cut in his bonus to a mere £40M.
While I agree that people should be rewarded for growth the market value of Persimmon only doubled, it didn't increase by, say, 100 times.
Conversely a couple of years ago the then boss of Aviva left becuase the company's shares had dropped to one tenth of their former value and the guy who left had overseen all of that drop.
I can't remember exactly but I'm sure he left with a decent payoff.
I wonder how you get to be in this high powered group, I'd be quite happy to get paid an extra £1M to leave for doing a shit job, with an almost certain guarantee of walking straight into a similar job, rather than suffering a huge demotion as you would expect in normal life.
|
|
|
|
Post by ChrisM on Nov 8, 2018 10:09:00 GMT
I wonder how you get to be in this high powered group, I'd be quite happy to get paid an extra £1M to leave for doing a shit job, with an almost certain guarantee of walking straight into a similar job, rather than suffering a huge demotion as you would expect in normal life. +1 If I were given a £1million bonus or pay-off, could afford to retire on the spot ! I wonder how shareholders allow Executives to take so much out of the company - it should be "banked" or re-invested to assist in hard times. Look for example at Woolworths; if they had had a few more millions in the bank, retained from years when they had been doing well, then they may have been able to avoid going under in one year when things got a bit tough financially. Companies don't seem to plan more than a year ahead when it comes to finances |
|
|
|
Post by PetrolEd on Nov 8, 2018 10:35:27 GMT
Bit like Football managers then.
|
|
|
|
Post by Tim on Nov 8, 2018 10:39:09 GMT
I wonder how you get to be in this high powered group, I'd be quite happy to get paid an extra £1M to leave for doing a shit job, with an almost certain guarantee of walking straight into a similar job, rather than suffering a huge demotion as you would expect in normal life. +1 If I were given a £1million bonus or pay-off, could afford to retire on the spot ! I wonder how shareholders allow Executives to take so much out of the company - it should be "banked" or re-invested to assist in hard times. Look for example at Woolworths; if they had had a few more millions in the bank, retained from years when they had been doing well, then they may have been able to avoid going under in one year when things got a bit tough financially. Companies don't seem to plan more than a year ahead when it comes to finances
Persimmon is rather different - in common with a lot of the housebuilders it has been paying a lot of money out to the shareholders, I think they carried out a share buyback of about £2.2 Billion.
They're still paying dividends and still have plenty of cash in the bank.
In reality everyone has won out of this - the directors, probably the staff, the shareholders and, lets not forget this, you and me if we have a private pension as most of the shareholders are investment part of the large pension companies.
|
|
|
|
Post by Big Blue on Nov 8, 2018 11:15:53 GMT
As I said, they've paid some chunky dividends, around £800M in Div in the past three years.
Fairburn's payout is justified in percentage terms, if not monetary terms.
|
|
|
|
Post by Bob Sacamano v2.0 on Nov 8, 2018 11:19:24 GMT
I wonder how you get to be in this high powered group, I'd be quite happy to get paid an extra £1M to leave for doing a shit job, with an almost certain guarantee of walking straight into a similar job, rather than suffering a huge demotion as you would expect in normal life. +1 If I were given a £1million bonus or pay-off, could afford to retire on the spot ! I wonder how shareholders allow Executives to take so much out of the company - it should be "banked" or re-invested to assist in hard times. Look for example at Woolworths; if they had had a few more millions in the bank, retained from years when they had been doing well, then they may have been able to avoid going under in one year when things got a bit tough financially. Companies don't seem to plan more than a year ahead when it comes to finances Not Woolworths - a flawed and outdated business model, ongoing historical costs, and years of losses means they were doomed to failure. Public companies are owned by their shareholders who want to see a return on their investment in the form of dividends and/or share value growth. That means year on year growth in turnover and profit - when that doesn't happen one year the AGM can be a difficult meeting for company directors. The reason these company directors (and football managers) get good payoffs is because when they were hired they were in demand and from that position of strength were able to negotiate a good backstop of a healthy payout if it all goes tits up. |
|
|
|
Post by Tim on Nov 8, 2018 12:52:01 GMT
The reason these company directors (and football managers) get good payoffs is because when they were hired they were in demand and from that position of strength were able to negotiate a good backstop of a healthy payout if it all goes tits up.
Yes but what actually happens is that they sign a contract with a lucrative salary, often get a chunky 'golden hello' and then when they make a mess of things they effectively get a bonus to make them go away.
For the rest of us we accept a job at a new place with relief that we've escaped from some hell hole, take a salarly that is probably a wee bit better than previously and then if we make an arse of things expect to get shown the door with no thatnks for doing a shit job.
Really, once again the large corporate world rewards top execs for failure (not in the Persimmon case but definitely with Aviva).
Obviously I'm only complaining because I'm a mere minion in these terms having failed to climb up the greasy pole of a large corporate. If some company were foolish enough to offer me £1M to come and work for them and a guaranteed payoff of the same, no matter if I caused their share price to plummet, I'd sign it in an instant. |
|
|
|
Post by Bob Sacamano v2.0 on Nov 8, 2018 12:59:45 GMT
The reason these company directors (and football managers) get good payoffs is because when they were hired they were in demand and from that position of strength were able to negotiate a good backstop of a healthy payout if it
Really, once again the large corporate world rewards top execs for failure (not in the Persimmon case but definitely with Aviva).
Overall, do you think the corporate world rewards more people for failure than those who succeed? |
|
|
|
Post by PG on Nov 8, 2018 14:05:47 GMT
I there there a a number of issues with the Persimmon situation and the guy deserved to go. Others should follow.
The remuneration committee gave him a multi-year bonus scheme that didn't have a cap, or an ability to renegotiate in a major change of circumstances. The introduction of help-to-buy one year after the bonus scheme started was such an event. So at that point they should have told him that his scheme was up for renegotiation. But they didn't. In my view the head of the remuneration committee and most of its members needs to go as well for not standing up and getting the bonus deal changed.
Whether the company doubles or trebles in value or whatever, £100M is an stupid amount of money, way bigger as % of salary than the increase a shareholder saw. If shareholders saw a doubling of value, plus dividends, then maybe 2x or 3x salary is a worthwhile bonus. Not £100M. If one thinks that a justification is that "well the company doubled in value so he deserves a % of that", well that would maybe be true if CEO's had to pay money in whenever a company goes down in value..... Not sure I've ever seen that happen. So you can't have upside only. That's what really, really pisses people off.
As said above, help-to-buy used government money to support first time buyers. Whether help to buy was a good idea in the first place is another debate. But people do take the view that Persimmon was therefore using tax payers money to pay out huge bonuses. Never a good look.
Then, once the £100M bonus new broke the whole thing was handled so badly. He is the CEO. Therefore it being handled badly was ultimately down to him. Giving a small % of your money to charity - and only after you've been caught red handed - only makes matters worse. Either come out fighting and face people down. Or surrender straight away. Half measures just keep you in the spotlight.....
Lastly, there was the car crash interview he gave to Radio 4. He had no idea what to say when challenged on his bonus and just made himself look an utter fool.
The new guy fared only slightly better this morning. On being asked about whether Persimmon would use some of their "super profits" from help to buy to subsidise more social or affordable housing, he basically attempted to dance on the head of a pin. Repeatedly...... I'd give him 6 months.....
The disaster at Persimmon is just one more episode and evidence of the way that too many people "at the top" of companies, government, charities, NGO etc, are just so totally removed from reality that they fail to see that what they are about to do or have done fails any "common sense" or "man on the Clapham omnibus" test and yet they still think it is justified. This sort of stuff is how revolutions start, or how Corbyn gets elected (even worse).
|
|
|
|
Post by Tim on Nov 8, 2018 14:34:28 GMT
Overall, do you think the corporate world rewards more people for failure than those who succeed?
Of course not but when they do hand out those rewards they're usually spectacularly inappropriate.
I think part of the solution, as with politics in general, would be to have a requirement for proper external and independent new blood on a periodic basis.
I've read a few examples where remuneration committees are constituted with non-execs who have a directorship in another business and the senior bod whose comedy bonus or pay rise they're determining actually has a similar non-exec role on their own remu committee. Thus they're not going to shit on that guy in case he returns the favour.
The big corporate investors need to take a proper, common semse view now as well. For too long it appears they've not really bothered so long as they're getting an ok return.
|
|
|
|
Post by Bob Sacamano v2.0 on Nov 8, 2018 16:35:28 GMT
Overall, do you think the corporate world rewards more people for failure than those who succeed?
Of course not but when they do hand out those rewards they're usually spectacularly inappropriate.
I think part of the solution, as with politics in general, would be to have a requirement for proper external and independent new blood on a periodic basis.
I've read a few examples where remuneration committees are constituted with non-execs who have a directorship in another business and the senior bod whose comedy bonus or pay rise they're determining actually has a similar non-exec role on their own remu committee. Thus they're not going to shit on that guy in case he returns the favour.
The big corporate investors need to take a proper, common semse view now as well. For too long it appears they've not really bothered so long as they're getting an ok return.
The running of a private limited company is down to the Board of Directors and they are answerable to their shareholders. In the case of large PLCs with big corporate investors/funds, they are answerable to their investors (possibly you or I) who could move our money elsewhere if we're not happy with returns. If the shareholders want to insist on external or independent review or seek salary and bonus caps that's down to them but i don't see any reason for Government or regulations to get in the way of this relationship, it has nothing to do with them. |
|
|
|
Post by Tim on Nov 9, 2018 9:41:23 GMT
I haven't suggested the Government get involved.
I simply meant that the top end of the corporate world appears to be the same as politics - there appears to be too many people who have come through the system because they know the right people rather than being chosen because of their independence and ability.
Just look at the attempted clear out the Corbynistas are trying to impose on the Labour party to get rid of Blairite types and non-believers. If they get their way then there will be no sensible balance within the Labour Party.
I think there appear too many people who are inter-linked at the higher end of corporate structures.
As a made up example its perfectly possible that, say, Jeff Fairburn could have been the CEO of Persimmon and at the same time a non-exec on the board of, lets say, BP with a place on something like the remu or audit commit while the Chairman of BP might've been a non-exec on Persimmon with a similar role.
If they were both on each others remu committee then there's a possibility that in the cosy non-exec world they wouldn't shit on each others nest.
Don't misinterpret this as me saying that none of these people is trustworthy because I don't think that's the case, I'm simply saying that on occasion it does look as if the same faces are on multiple boards and there could occasionally be a conflict of interest.
Just because they've been successful doesn't mean that none of them are as easily swayed/influenced as anyone else.
|
|
|
|
Post by franki68 on Nov 9, 2018 11:46:36 GMT
I think the issue was that Persimmon were perceived to have benefitted from the Help to Buy programme so an element of his remuneration could be seen to be at the expense of the taxpayer. Given that their share value has doubled in 5 years under him and that the last three dividends paid out have been 100p, 25p and 125p respectively I don't think any shareholders were calling for him to go. It's a PR exercise, no more no less. Benefitted ? Just a bit,2/3 of their homes sold have been through government help to buy schemes,without which Persimmons would have performed quite badly. |
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 9, 2018 12:16:08 GMT
It seems to me that the whole system of hyper inflated wage and bonus packages is geared towards the short term profitability of the company. Relying on constantly growing profits leads to the whole boom/bust cycle and companies not having the financial security to weather normal ebbs and flows in finances. How can anyone with a brain suggest continual growth is even possible? For a while yes but forever? Taking care of the customer base and a sense of financial reality would seem to be required but where is it? Some time ago, just before the big crash, people were being pressured to have 70 year and lifetime mortgages etc, just to maintain the increase in property prices, how is THAT realistic? I suppose that the old adage of our democracy being the worst in the world, apart from all the others. Churchill I think, not exact but close.
|
|
|
|
Post by PG on Nov 9, 2018 14:35:16 GMT
I think there appear too many people who are inter-linked at the higher end of corporate structures. As a made up example its perfectly possible that, say, Jeff Fairburn could have been the CEO of Persimmon and at the same time a non-exec on the board of, lets say, BP with a place on something like the remu or audit commit while the Chairman of BP might've been a non-exec on Persimmon with a similar role. If they were both on each others remu committee then there's a possibility that in the cosy non-exec world they wouldn't shit on each others nest. Don't misinterpret this as me saying that none of these people is trustworthy because I don't think that's the case, I'm simply saying that on occasion it does look as if the same faces are on multiple boards and there could occasionally be a conflict of interest. Just because they've been successful doesn't mean that none of them are as easily swayed/influenced as anyone else. There's the old joke of course. And like all jokes, it is rooted in truth..... What's the difference between a non-exec director and a supermarket shopping trolley? They can both hold a lot of food and drink, but at least a supermarket trolley has a mind of its own. Ta boom, tish! Tim's point is very valid. Way too many non-execs and execs seem to hold multiple appointments and are able to influence policy in other places that benefits them in turn. The old chestnut that it is an international market and one must pay accordingly - i.e enormously - just fails the common sense test for me. And it is also a closed shop in many ways. I've tried to apply for a few non-exec roles since I retired (at way lower and local levels , hardly PLC's) and I am always told, "ah, you've not got any experience as a non-exec". Well, d'oh, I've been in full time employment until I retired. And one place said they didn't want "group think" and then went on to appoint two people who were from the same closed shop group. Go figure.... |
|
|
|
Post by johnc on Nov 9, 2018 15:20:12 GMT
It is all a bit incestuous in the Boards of medium and large companies.
My ex wife's father was a non exec making a fortune adding to his millions and was on the Boards of 3 or 4 companies. Several people he knew were also in similar positions and on the same Boards. He used to hold dinner and cocktail parties and it was clear that it was just a big club. However he was a man of principle so I think in the main he would have done the right thing but I don't think you can help but be swayed when you know and socialise with others who might want you to reconsider your position slightly. |
|
