The boss of housebuilder Redrow has described a £110m bonus being paid to the boss of rival Persimmon as “very, very wrong”.
Steve Morgan, the self-made multi-millionaire founder of Redrow, said property industry bosses were “peed off” with the vast amount of money being handed to Persimmon CEO Jeff Fairburn. Politicians, campaigners and City experts have described the vast payout as “obscene” and “corporate looting”.
Morgan, who holds a £750m stake in Redrow, which he founded in the 70s, said the largesse at York-based Persimmon was “doing the whole of the industry a complete disservice”.
“One company has got it very, very wrong. Everybody in the industry is as peed off with this Persimmon thing as the people outside it,” Morgan told the Evening Standard. “For somebody who has not taken a salary for 20 years, it sticks in the craw, being called a greedy housebuilder because of that one company. I’m sick to the teeth of seeing the headlines of greedy housebuilders.”
Morgan’s comments came as Redrow announced a 26% jump in half-year pre-tax profits to £176m, and rewarded shareholders by increasing its interim dividend by 50% to 9p a share. The dividend increase will pay Morgan, who owns 32.5% of the company, just over £11m.
Morgan, who used to own Wolverhampton Wanderers, has a net worth of £831m according to the Sunday Times rich list. The rich list compiler said Morgan would have been a new entry to the UK’s billionaires club, but has donated £226m worth of Redrow shares to charity. He also donates his annual salary to his The Morgan Foundation charity, which helps disabled or disadvantaged people in north Wales and the north-west of England.
The Persimmon bonus scheme is believed to be Britain’s most generous corporate payout ever and will hand more than £500m to 150 staff this year. Around 80 workers will get more than £1m.
Morgan said it would never have happened if he were in charge, as he would have capped the maximum payout.
Persimmon’s chairman, Nicolas Wrigley, and remuneration committee chairman, Jonathan Davie, resigned in December after acknowledging that they should have capped the maximum bonus.
Vince Cable, leader of the Liberal Democrats, said the “scale of this bonus is obscene” and built on a “government subsidy”, as housebuilders’ strong stock market performance has been fuelled by the help-to-buy scheme.
Garry White, the chief investment commentator at the stockbroker Charles Stanley, said: “The size of the [Persimmon] bonuses means management could easily be accused of corporate looting, so shareholders have every right to be unimpressed.”
Persimmon’s shareholders, including Royal London Asset Management (RLAM), have called on Fairburn to consider “taking a voluntary reduction, or donating some of the money”. The majority of shareholders, however, supported the scheme when it was set up.
Fairburn has refused to hand back any of his award, saying he deserves the full payment – which is more than enough to end homelessness in York – because he “worked very hard”. Fairburn, 51, has refused to state whether he will donate any of the award to charity.
“I consider my plans for any charitable giving to be a private matter and I do not wish to comment any further on that,” he said last month. “You’ve got to put this into context of what has been achieved. I do fully accept that the potential payouts under the scheme for top individuals are very significant.”
Fairburn has already received part of his payout and will qualify for the remaining £60m worth of bonus shares, which are linked to the firm’s dividend payments, this summer.