Berkeley Group faces a possible kick-back from shareholders this week as it seeks approval for one of the most extravagant executive payouts in British history.
The high-end property developer has handed its boardroom bosses £92m in long-term share bonuses; chairman Tony Pidgley received £29.2m and chief executive Rob Perrins was rewarded with £28m.
Mr Pidgley has earned £74 million in remuneration in the past three years, while Mr Perrins has garnered £51 million over the same period.
Glass Lewis and Pirc, two of the world’s leading advisory groups, have said that investors in Berkeley should reject its remuneration package at its annual meeting on Wednesday.
Glass Lewis called the pay packets “grossly excessive”.
The vote comes after Prime Minister Theresa May pledged to publicly name firms which were subjected to a shareholder revolt over high pay. Firms would be put on a register if at least one fifth of shareholders disapproved of executives’ pay.
The house builders lucrative salary scheme is based on a long-term incentive pay plan introduced in 2011 that promised executives 19.6 million shares if certain targets were hit by 2021. At the time, the targets seemed a strectch and Berkeley’s shares were worth about £10 apiece. The shares have since soared and last week closed at £37.52.
This year Berkeley introduced a cap on future payouts of the 2011 scheme and a spokesman said that “90 per cent of executive pay last year came from shares earned over the past six years. This year we recommended halving key executive pay, which was backed by 97 per cent of shareholders.”
In a trading update, Berkeley said that stamp duty — which was hiked last year — Brexit uncertainty, and changes to tax relief on mortgages were damaging the capital’s housing market.
The statement said: “While Berkeley is in excellent shape, the London market continues to be adversely impacted by both, uncertainty around the terms and implications of Brexit and, the changes in recent years to SDLT [stamp duty] and mortgage interest deductibility.”
It said London’s planning environment “remains challenging” and is “still yet to reflect the current market conditions.”
“As a consequence, new construction starts in London remain some 30% lower than 2015,” the statement added.
DMZ thinks that the new policies being introduced by the Government will go a long way to protecting the stakeholders, but time will tell how impactful the changes will really be.
As for the housing market remarks made by the Berkeley group, this mirrors the same message DealMakerz has been making for some time – showing the positive (executive pay) and negative (stamp duty) impact that the Government can wield on a currently fragile UK housing market.