UK Shareholders’ Association directors are seriously concerned about faults in company reporting regulations concerning information about executive remuneration and apparent failures by the appropriate authorities to monitor actual remuneration reporting practices.
Two major house-builders are the immediate cause.
UKSA’s policy team has discovered some shocking facts.
• The latest Persimmon report does not reveal that, under a 2012 LTIP, whose performance condition is now 99% certain to be achieved, 4 directors will receive £142m.
• Persimmon’s ‘min/average/max’ forecast remuneration charts for 3 top individuals, required by the regulations, have been omitted without comment
• If awards to other senior Persimmon executives are included, the total liability under this LTIP is c£400m, but the amount reserved for all unvested LTIPS is just £19m.
• Taylor Wimpey reports in each of the past three years have substantially under-stated the CEO’s maximum pay possible in the succeeding year (eg by £2.2m on the last occasion)
• Examination of Taylor Wimpey’s remuneration reports suggests that the basis on which maximum bonuses will be paid can be concealed from the members.
UKSA’s policy team believes that current reporting regulations are based on a Financial Reporting Council report which was seriously defective, but has been unable to secure agreement to a rethink.
A meeting is now being sought with the FRC to discuss UKSA’s latest findings.