Persimmon boss Jeff Fairburn has come under fire from the chair of an influential parliamentary committee that is gearing up to interrogate him over his £100million bonus.
In a letter seen by The Mail on Sunday, Rachel Reeves – the Labour MP who chairs the Business, Energy and Industrial Strategy Committee – said the huge bonuses at housebuilding firm Persimmon were ‘impossible to justify’.
She was responding to Sir Vince Cable, the Liberal Democrat leader, who last month demanded an inquiry into the bonuses at Persimmon which he called ‘the worst style of fat cattery’.
Persimmon boss Jeff Fairburn stands to make at least £75million
Chief executive Fairburn has declared that he will forgo about £25million worth of shares, but he still stands to make at least £75million.
Reeves wrote: ‘Executive pay has been a concern of mine for some time and I agree that pay awards of the scale we have seen at Persimmon are impossible to justify and also undermine the reputation of British businesses in general.’
She added: ‘I would expect to take evidence from a selection of companies and the Financial Reporting Council.’
Her comments come ahead of Persimmon’s shareholder meeting next month where investors are expected to vent their anger at Fairburn’s handling of the situation which has led to him becoming a whipping boy for fat-cat pay.
For weeks Fairburn refused to comment on his plans for the bonus, insisting it was ‘a private matter’ despite the resignations of two directors including chairman Nicholas Wrigley.
However, amid criticism from shareholders, Fairburn bowed to pressure and said he would donate ‘a substantial proportion of the total’ to charity.
He also eventually took a cut to the overall bonus, as did finance director Mike Killoran, who was also awarded a multi-million pound payout.
An industry source said Persimmon is likely to be issued with a ‘red top’ warning by the Investment Association’s corporate governance advisory service ahead of the shareholder vote. ‘Red tops’ are seen in the City as a stern rebuke.
A spokesman for the IA said it did not send its reports on companies until their annual reports are released. Persimmon’s report is expected in the coming weeks.
The Housing Minister Dominic Raab is expected to raise the subject of Persimmon bonuses tomorrow when he gives evidence to the Housing, Communities and Local Government Committee.
A spokesman for Persimmon declined to comment.