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Persimmon has announced an acceleration of its Capital Return Plan, but shockingly, made no mention of the resulting acceleration of zero-cost options now estimated to be worth £500million to management. With options previously vested the total becomes £600million. The Finance Director alone will receive £72million.

Great news for investors perhaps, that dividends will reach 900p in the plan period, up from 620p, but the ten-year Long Term Incentive Plan approved in October 2012 will now, with just a minor 50p tweak in the announced programme, become a less-than-six-year plan. There is no hint of numbers of this magnitude in any published announcement.

What is wrong with this? The answer is, a lot:
• The company is not being open about it.
• The full value and its implications have never been acknowledged by the company (which resisted UKSA’s attempt to seek transparency).
• Poor stewardship by the company’s fund management shareholders failed to curb this hugely excessive transfer of value from their investors to the company’s managers.
• Poorly worded remuneration reporting regulations (against which UKSA has protested) have allowed this to go unnoticed.
• It’s hard to see how financial statements that ignore this transfer of value, equal to a full year’s net profit, can be said to present a ‘true and fair view’ as stated by the directors in their recent announcement of 2015 results.
• It’s hard to see how accounting standards that allow this transfer of value to be ignored can be fit for purpose in this respect.

Anaysis of the £500million here
UKSA’s 2013 review of this LTIP here
UKSA’s 2014 review of this LTIP here
Financial Reporting Council’s comment on ‘true and fair view’ here

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