A housing boss whose ‘excessive’ pay triggered a huge shareholder revolt is one of the worst-value chief executives on the FTSE 100, it has been claimed.
Jeff Fairburn, the chief executive of Persimmon dubbed Mr £131m over the potential size of his bonus pot, has been ranked as one of the lowest performers on an annual list by pay experts at Pearl Meyer.
For every pound received by the 52-year-old over the past four years, shareholders have received just £114.
Under fire: Persimmon chief executive Jeff Fairburn
That compares to around £478 received by investors in companies with the best value chief executives.
Asked if this meant Fairburn was ‘not very good value for money’, Pearl Meyer boss Simon Patterson replied: ‘That’s exactly right.’
Luke Hildyard, of the High Pay Centre, said the findings laid bare the ‘sheer excess’ of Fairburn’s lucrative pay deal. He added: ‘This might be the single most egregious FTSE 100 pay package to date.
‘Committees that set executive pay seem obsessed with outbidding rivals to bring in supposed superstar executives, but getting to the top of this value-for-money list would be a more appropriate objective.’
Fairburn was paid £47million last year, as he picked up £45million through a controversial bonus scheme that sparked outrage. He has since been handed shares worth £38million this year through the scheme.
The company says he is worth every penny, having handed billions of pounds in dividend payments to shareholders as profits have soared. Persimmon’s share price has also rocketed as the housing market has recovered.
But Pearl Meyer found Fairburn was still at the bottom end of performance in terms of value for money on the FTSE 100. The measure was calculated by taking the amount earned by shareholders, through dividends, share buybacks and increases in market value from 2014 to 2017, then dividing it by the chief executive’s pay.
This showed that for every £1 earned by Fairburn, shareholders got £114.
The average figure for those deemed the worst value was £140, suggesting Fairburn ranked very low indeed.
Beau O’Sullivan, of the Share Action campaign group, said: ‘Not only is his pay grossly exaggerated for his performance, he’s also proving to be poor value for money. Shareholders big and small should be ramping up their engagements with the Persimmon board when it comes to corporate governance risks like high executive pay.’
Patterson said chairmen should be prepared to be held to account over pay decisions. Persimmon did not respond to a request for comment.