HOUSEBUILDER Persimmon has revealed plans to reward senior managers with options over up to 10 per cent of the company if it meets a plan to pay out £1.9bn to shareholders over the next decade.
In February, Persimmon unveiled a dividend payout scheme totalling £6.20 per share over the next 9.5 years – which it intends to achieve without piling debt on to its balance sheet.
Under its proposed new long-term incentive plan (LTIP) about 140 senior managers, including executive directors, will be granted options based on the success of the capital return plan.
Options offer the right to purchase shares at an agreed price. Under Persimmon’s plan, the price of the options will start at £6.20, but will decrease by a sum directly corresponding to the amount the group pays out in dividends.
That means their price could fall to zero if the pay-out plan is completed fully by the end of 2021.
Shares in Persimmon last night closed down 23p at 755.5p.
In a letter to shareholders, chairman Nicholas Wrigley said Persimmon’s remuneration committee “concluded that a new long-term incentive plan should be introduced so as to provide a closer link between reward to executive directors and senior management for the successful implementation of our strategy”.
He added the committee consulted the company’s major shareholders. The LTIP it is thought to have won support from corporate governance advisers the ABI and RREV.
The LTIP is much longer than corresponding bonus schemes at other housebuilders, which are usually for around three years.
The housebuilder has grown profits and slashed debt in recent years amid a stable but depressed housing market.
“The directors consider that the above proposal is in the best interests of the company and its shareholders as a whole,” said Mr Wrigley. “The directors recommend shareholders vote in favour of the resolution set out in the notice.”
Options will be granted over a maximum of 30.2m shares.
Under the scheme, chief executive Mike Farley could be granted up to 4.8m share options during the life of the LTIP. Grants of options to managers will be progressively lower the less senior they are. Shareholders will vote on the plan on October 17.