Persimmon chief’s £75m bonus ‘almost unfathomable’ – Raab

Housebuilder Persimmon’s award of a £75m bonus to its chief executive, Jeff Fairburn, was “almost unfathomable”, the housing minister, Dominic Raab, has told MPs. Persimmon faced fierce criticism earlier this year after it emerged that a rise in profits, which has been attributed to the taxpayer-backed help-to-buy scheme, would trigger more than £2oom in bonuses for three executives.

The company trimmed the payouts by £51m amid widespread outrage, with Fairburn accepting a cut from £100m to £75m and promising to give a “substantial” portion to an unnamed charity.

In an evidence session held by the housing committee on Monday, the Labour MP Helen Hayes asked Raab if he was comfortable with the “positive effect” that help to buy had had on housebuilders’ profits and executive bonuses. “It’s almost unfathomable,” said Raab. “No I’m not comfortable with it.

“That’s why the government has introduced measures on corporate governance and is encouraging shareholders to take a greater grip on it. We want to see shareholders take a stronger grip on it and we’re starting to see more shareholder activism.”

Hayes asked if the government was monitoring the effect that help to buy was having on corporate profits. “I’m not sure how we would measure a hydraulic relationship between those three points,” Raab said. He added that “other parts of government” were looking at corporate pay.

Help to buy is designed to spur the construction of new homes by giving aspiring homeowners an interest-free government loan worth up to 20% of a property’s value – if the buyer opts for new build. According to several reports, housebuilders have simply increased the price of homes in response, driving up prices and boosting their own profits.