Persimmon's chairman resigns over pay dispute

Persimmon said it has increased the number of new homes it has built by over 65 per cent over the past five years

The York-based group has faced a media storm over a long term incentive plan introduced in 2012, which could see the management team share the money if they meet certain targets for returning cash to shareholders while continuing to grow the group.

Persimmon admitted that the generous pay out plan presided over by the pair "could have included a cap".

Chief executive Jeff Fairburn is in line for the biggest payout, which could top £100m.

Persimmon said Mr Wrigley intends to resign and Mr Davie has already left the group.

Persimmon said: "The company introduced a Long Term Incentive Plan in 2012 (2012 LTIP).

"The board believes that the introduction of the 2012 LTIP has been a significant factor in the company's outstanding performance over this period, led by a strong and talented

executive team.

"Nevertheless, Nicholas and Jonathan recognise that the 2012 LTIP could have included a cap. In recognition of this omission, they have therefore tendered their resignations."

Persimmon said that since the award scheme was launched, the company has made substantial cash returns to shareholders at the same time as increasing the size of the business and delivering significant value.

The group said it has increased the number of new homes it has built by over 65 per cent and invested £2.9 bn in new land over the past five years.

Analyst Charlie Campbell at Liberum said: "The 2012 LTIP scheme has been far more successful than the company or observers expected, and has created controversy through the amounts generated for management across the group.

"The timing is most likely explained by the fact that under the scheme 40 per cent of options are exercisable at 31 December 2017. In total there are 24m shares outstanding in the LTIP with an average exercise price of 1977p, suggesting pre-tax upside of around £162m.

"These shares were spread around 140 managers when the scheme was set up in 2012."

Since 2012, Persimmon’s share price has soared and it has returned £1.5 bn to shareholders.

The directors will be able to sell 40 per cent of their share options from the beginning of next year and the remaining options could be exercisable as soon as next year, depending on when the next target is met.

Excessive bonuses have attracted public anger since the financial crisis and Prime Minister Theresa May has said the yawning gap between directors' salaries and workers is irrational and unhealthy.

Martin Sorrell, the head of the world’s largest advertising group WPP, received £70m in 2015, one of the biggest ever payouts in Britain.

His pay has been cut to no more than £19m this year.

Persimmon has faced criticism from investors including fund manager Royal London Asset Management which said last year that the builder should scale back its executive pay plan.

It has appointed a new chairman of its remuneration committee and a senior independent director to lead the process of appointing a new chairman.

Mr Wrigley will remain in the role until his successor is chosen.