INVESTORS in Berkeley Group, the luxury housebuilder, yesterday gave the go-ahead to a controversial restructuring plan that could land the company’s management team up to an estimated £150 million in bonuses.
The company said that 93.4 per cent of shareholders voted in favour of plans to return £1.45 billion to shareholders over the next six years, easily beating the required 75 per cent acceptance threshold.
In a second motion, 77.56 per cent of investors voted in favour of a pay deal to give incentives to the company’s management, which will see Tony Pidgley, managing director, and three other directors handed 15 per cent of the restructured business.
The second vote required only 50 per cent acceptance, but 21.32 per cent of shareholders still voted against the deal.
Peter Montagnon, head of investment affairs at the Association of British Insurers (ABI), which recommended voting against the pay deal, said: “This is a substantial protest which should cause companies to consider very carefully how they should be structuring such schemes.
Advertisement
“It would not have been difficult for Berkeley Group to meet the objections of shareholders by an adjustment to the structure, which would still have enabled the management to reap substantial rewards.”
Mr Montagnon had previously placed the bonus schemes on “red” alert because he viewed the rewards on offer to management as “too rich”. He had hoped Berkeley would place a cap or taper on the potential bonuses to limit the payout.
Tony Pidgley, managing director and founder of Berkeley Group, said that he was happy with the result. Responding to the ABI’s comments, Mr Pidgley said: “The vote speaks for itself — the majority of people liked the deal.”
He added: “I would like to see managers encouraged and rewarded to make longer-term commitments to their companies.”
Mr Pidgley said that unless managers were well rewarded, more executives would be tempted away from stock market companies and into the private sector.
Advertisement
It is still unclear how much Mr Pidgley and his fellow directors stand to make from their 15 per cent stake in the restructured company, because no one has put a value on how much the business will be worth.
It is thought that Mr Pidgley and the directors expect the business could be worth anywhere between £300 million and £800 million, depending on market conditions. That would give them bonus shares totalling anything between £45 million and £120 million.
However, some investors believe the company could eventually be worth £1 billion — which would mean the directors would share bonuses worth £150 million.