Housebuilder Persimmon has narrowly escaped a humiliating defeat after shareholders rebelled against the company's remuneration report.
Persimmon's executives suffered a major rebellion as 48.5 per cent of shareholder votes were cast against the company's remuneration report, whilst 51.5 per cent voted in favour. The firm needed a 50 per cent vote to get the report passed.
However, 30.9 per cent of shareholders abstained from the vote. If they had voted against the report, it would have been a resounding defeat for the York-based firm, which is Yorkshire's biggest plc.
In total, just 36 per cent of shareholders voted in favour of the remuneration report while 64 per cent refused to support it.
Persimmon's interim chairman Nigel Mills said: “Although the remuneration report was passed at today’s AGM, we recognise that a substantial number of shareholders either voted against the resolution or abstained.
"In recent months we have engaged extensively with a large number of shareholders, carefully listened to their views and valued their engagement. But we must now look to put this issue behind us and to enable the business to be recognised once again for its exceptional performance and for the central role it is playing in building the high quality, affordable houses that Britain so badly needs."
However, rebel investor groups and private shareholders seemed in no mood to put the issue behind them.
Several shareholders spoke out at the AGM in York to complain about “enormous sums” awarded to the group's directors.
Euan Stirling, global head of stewardship at Aberdeen Standard Investments, Persimmon’s sixth largest shareholder, said the excessive payouts have damaged Persimmon's brand.
He said being the chief executive of a FTSE 100 company requires "a personal motivation that goes beyond simply amassing a fortune”.
Earlier in the day, Mr Mills apologised "unreservedly" to shareholders over the housebuilder's handling of executive pay, saying the debacle was a matter of "profound regret".
Chief executive Jeff Fairburn's pay packet has sparked outrage among politicians and shareholders.
He is in line to pocket a near £75m payout, including a £25m share payout in the summer.
Earlier this year, shareholders and politicians united to condemn what would have been an even higher £100m payout, until Mr Fairburn voluntarily moved to calm the furore by handing back £25m in bonuses.
Mr Mills said the row has overshadowed the group's stellar performance.
"I recognise that there has been significant strength of feeling from some shareholders over this issue," he said.
"And so please let me take this opportunity to apologise unreservedly to our shareholders. This could have all have been handled better. Indeed it should have been.
"It is a matter of profound regret that we got to the position where we had a company with an exceptional management team, delivering exceptional, market-beating performance, that has been overshadowed by a row over pay."
He also pointed out that shareholders voted through the pay deal in 2012 and that no-one could have predicted that the "performance of the business would be so good over such a long period of time".
Royal London Asset Management (RLAM), which holds a 0.5 per cent stake in Persimmon, has said the pay awards were still "extremely generous".
This is despite Mr Fairburn pledging to forgo his annual bonus next year and hand over a "substantial amount" of his pay award to charity.
Collectively, three Persimmon directors agreed to hand back about £50m in bonuses last month to calm the mounting anger.
Mr Stirling said: "The reduction in the amount accruing to him from £110m to £75m does not even get close to acceptable.
"Company directors have a legal responsibility to act in the best long-term interests of the company that employs them.
"Today's remuneration results suggest that the executive directors at Persimmon have lost sight of that because the long-term success of the company is being endangered by the reputational damage associated with grossly excessive pay."
In a separate trading update, Persimmon said the property market remains "solid".
The group said forward sales were around 8 per cent higher year on year at £2.76bn since January 1.
It added that pricing conditions continue to be firm across the regions, with the average selling price up to around £236,500 across 9,048 homes sold in the private market, up 1 per cent from 8,928 a year ago.