"Over the last couple of years, LSE:PSN:Pearson plc has been a thorn in the portfolios of celebrated fund manager Nick Train - but he still believes the company will succeed. "It has been a source of considerable bother for longer than I care to ..."
Good figures "The Group's forward sales position remains very strong with total forward sales revenue, including legal completions taken to date in 2018, of £2.76 billion, being 8% higher than last year".
Good dividend return "The additional payments over the next three years will bring the total value of the Plan to £13.00 per share, more than double the £6.20 per share original commitment made by the Board in 2012. The total value of the Plan is now c. £4.07 billion.
Total shareholder returns to date from the launch of the Group's new strategy in 2012 now exceed 500%."
Affordibility will stifle house price increases - it always does and any increase in interest rates will make it worse. Once house prices stop rising for a period, then profits will shrink quite rapidly as I've demonstrated below.
It's too late to buy into this cycle - but if you are onboard already why not stay onboard and pick up another divi or two before banking the profits you have made and leaving a few % for the next buyer. Once I have made 5 x my original investment I'm off .
Correct me if Im wrong but I think PSN is a solid investment.
The 125p + 110p = 235p annual dividend represents a 9% yield at the current price around £26.50.
This dividend will cost PSN £2.35 x 308,856,430 shares = £726 million pa.
PSN can afford that dividend because it has been generating £500k 800k free cash flow per annum AFTER tax and AFTER business re-investment over each of the past three years. As PSNs vertical supply chain kicks in we could hope to see profits improve further. So the dividend should be payable out of free cash flow. But in any case PSN has £1,000 million in the bank after deducting the recent 125p special dividend which can also be used to pay future dividends. 2018 has started well and if that keeps up further increases to the dividend are a possibility.
So 9% dividend continuation is assured, subject to future macro considerations.
DEMAND FOR HOUSING
The UK needs more new house builds 200-300k per annum. In 2017 PSN delivered 16k new houses (Taylor Wimpey delivered 14.5k) so we have a long way to go to improve market share and management are set on doing that.
GOVERNMENT POLICY IS ON OUR SIDE
Government is onside with the need for more homes as evidenced by (a) Help to Buy oriented towards new build homes and (b) private landlord disincentives designed to force them to sell-up by 2020 when mortgage interest cost will no longer be tax deductible.
Average new build house price of £213k might seem steep when the average salary is only around $30k pa, so a house is 7x salary with an annual interest cost of £6-7k. But with the increasing participation by women in the workforce and side hustles like Airbnb, ebay and Uber, most house-buying households probably have double incomes anyhow meaning a £213k house really represents 3.5x household income which means most are not over-stretched in the prevailing low interest rate environment.
So house prices are unlikely to be pushed down by widespread mortgage defaults and forced sales.
FAVOURABLE INTEREST RATES
Globally, it doesnt look like interest rates are heading upwards nor is there hyperinflation to require that. Most likely interest rates will remain low and increase steadily as central banks are fully aware of the catastrophic effect of Norman Lamont style panic increases.
The availability of mortgages should also be resilient against GFC-type shocks because the banks now have higher capital ratios than prior to the GFC. For instance Lloyds Bank has a CET1 capital ratio of 15%.
WHAT'S NOT TO LIKE?
It might be famous last words, but structurally I cannot see risks due to the strength of household income, government policy and resilient bank mortgage lending. Continuing sales by PSN and the house building sector should continue. PSN have foreseen the black swan of capacity constraints by increasing this years output through inhousing labour, brick and tile capacity which positions us well and helps to explain why we should continue to enjoy a +9% dividend.
Yes I think you have understood the position pretty well, and I'm not implying that there is anything wrong with profits already booked - thankfully accounting for housebuilders is a lot simpler than accounting for long term construction projects. My overall point, having worked with this industry in the past, is that some people assume that if house prices remain static and at their current levels then house builders' profits will remain at their current level, but this is not the case. If there is no inflation in house prices then the inflationary benefit of the 4 + years from land buying to selling the houses is lost. What I have shown is that large impact of losing that benefit. In other words it doesn't take an actual reduction in selling prices for housebuilders to become less profitable, it just takes a marked reduction in the rate of inflation or a plateauing of house prices.
Try doing some simple spreadsheets of what you think the fundamental drivers are for Persimmon's profits over the past five years, including volumes, the "5 year buy land to sell house holding period", inflation in SP's over that period, inflation in build costs, efficiencies etc - it really is a simple business and a fairly good model wouldn't take too long ( Oh and dont forget the cost of the Outrageous management incentive scheme, which wont recurr). Shouldn't take more than a day to build a basic model. Now see what happens if house prices only increase at 2% pa or reduce by 1% pa, couple that with a small reduction in volumes and I think you will begin to see why the shares may be fully valued at the current price.
Dutchman, thanks for sharing your knowledge. Im still trying to make sure I understand your point and respond sensibly. Ive now got too much tied up in PSN to get it wrong.
Your four year estimate is about right. PSN tell us that new land investments generally [take] at least five years to build and sell through (2017 ARA page 27).
As to your concept of holding gains I dont think we are talking about any gains PSN have already booked in 2017 or prior years. Those profits are securely banked. For each of the past seven years EBIT + non-cash expenses added back approximately equals net cash inflow from operations. So underlying historic earnings seem to be genuinely supported by cash flows with no material accounting/valuation games or timing differences going on.
So if I understood correctly, future margins may be lower than those we have banked to date if future selling prices do not benefit from future inflation. I will over-use the word future as I think that is what we are talking about. The historic margins are genuine as shown by the cash flows.
I do agree future margins may be squeezed if either future inflation tails off or future demand for new houses tails off. As you have shown that is a mathematical necessity.
Your scenario A assumed zero cost inflation and zero sales price inflation each year for four years. Pretty unlikely that we would experience four years of zero inflation.
Scenario B assumed (favourable) differential inflation of 4%pa costs and 8%pa on sales, which is fairly optimistic and understandably produces a favourable result.
IMHO reality is more likely to be in between those two scenarios. The problem is the business model itself which requires significant investment upfront before a sale is achieved many years later. But PSN have shown themselves adroit in managing that risky model to the companys advantage, no doubt through cautious business case analysis including sensitivity under a variety of favourable/unfavourable inflation projections.
Deflation would be a bigger problem for us because that could result in final selling prices being less than historic costs, although I think thats pretty unlikely too and even if it did happen it should be blindingly obvious to all market participants and PSN would react accordingly to minimise the damage.
Risk of future margin squeeze is also mitigated by PSNs vertical integration of their supply chain to reduce cost. The profits on bricks, internal partitions, ceiling cassettes and, soon, roof tiles, now stay with us. The flow-through effect of this is PSNs increasing profit margin from around 15% a few years ago to over +20% today. That increases our future margin safety buffer, which is another reason I am delighted with the foresight of this board and management team.
Of course there are still other risks including a drop in demand for new housing or pressures from the competition which could mean the investment in Space4, Brickworks and the roof tile business may prove costly. In that respect the 3/5 customer satisfaction score concerns me a bit because I hope PSN are not cutting corners to maximise short-term profits at the expense of long-term.
Thank you for the time taken for your detailed response, however you misunderstand the point I was trying to make. Of course there are no "holding gains" or upward revaluations shown in the P&L account as land is considered to be stock or inventory held for resale and is therefore valued at the lower of cost and net realisable value; the accounting rules prohibit upwards revaluations and profit cannot be recognised until it is sold. What I would refer to as "holding gains" nevertheless arise and flow through the P&L a/c. Let us compare two scenarios. In scenario A there is no house price inflation, in Scenario B there is house price inflation averaging 8% . In both scenarios the time taken from signing a contract to buy land and building a house and legally completing the sale is 4 years ( not unreasonable I think). The targetted margin is for the sake of argument 20% of sales prices, incentives, selling costs etc are 5% of sales, and build costs ( excluding land are) are expected to be 35% of initially anticipated selling prices.
When negotiating to buy the land the appraisal of the site suggests that the selling price of one house is £250k. The build costs are therefore £88k (35% of 250), the overheads are £12k (5% of 250), therefore to achieve their margin 20% (£50k) margin they musn't pay more than £100k for the land. If they pay that figure the margin of 20% will be achieved ( 250 - 88 -12-100 = 50)
Scenario B ( with inflation of house prices of 8% pa over 4 years, let's also make this realistic by adding in cost inflation over 4 years of half that rate so 4% pa over 4 years.
So the costs are:
Land per original appraisal £100k
Build costs - assuming an average of 4 years = 17% compound so £88k *1.17 = £103k
Selling price 8% pa compound for 4 years is 36% so sales price = £340k
Sales costs = 340*5% =17k
Now the Profit looks very different;
340-100-103-17 = £120k A whopping 140% higher!
So the profit has increased from £50k to £120k purely through the effect of inflation on house prices over the holding period of the land. That is what I meant by the holding gain, and illustrates how, if house price inflation stops, then housebuilders profits could tumble.
You can play with these figures how you like, but the results are similiar all due to the impact of inflation on selling prices when the cost of the raw materials ( land ) was fixed a number of years ago. If the housebuilder anticipates future inflation in house prices when bidding for land, and then that inflation fails to materialise the impact is even greater.
I do know about audits and housebuilders accounts from different sides of that table.
Hi there Dutchman and thx for posting a few areas of concern. Let's see if we can figure them out.
"all the stats show that the market is slowing and house price growth is tailing off"
I take it you are questioning whether we might be at the end of a strong market cycle.
Sure I've seen the value of my own house plateau which seems to support your point. But that's second hand houses not new houses such as those built by PSN. New houses remain in demand which should be favourable to the housebuilding sector.
"that land would have been purchased based on expected selling prices at the time the land price was negotiated"
With every company I've had dealings with, they would have sought to pay the cheapest price possible based on market prices at the time of purchase. The "expected selling price" would not have been part of the negotiation with the land seller who would have been screwed down to the lowest possible price. The only consideration of "expected selling price" would have been PSN's internal business case go/no-go decision.
"if house prices hold steady over, say, 3 years then the holding gains evaporate"
You had me scratching my head on that one so I went back to the accounts. I may need your help on this. Here's what I found:
(1) The income statement shows margin as being made up of sales minus cost of sales. They do not show asset revaluation gains as, say, a commercial property investor would.
(2) But there ARE still risks around revenue recognition, for instance if they had Jan 2018 sales which were wrongly brought into Dec 2017.
(3) Land inventory is shown at lower of cost or net realisable value (note 2 accounting policies). Cost can include the costs of gaining planning permission and other improvements. So land inventory can be impaired down but not valued up based on expected selling price.
(4) These matters are reviewed by the external auditors Ernst & Young and reported on in their report (pages 82 & 83).
So I don't think there are any "holding gains" on assets that are being held but have not yet been sold because as far as I can see PSN do not book asset revaluation gains.
But I guess it is still possible there might be impairments to land cost which have not been booked in the accounts. The assurance we have on that is the management bi-monthly development valuation meetings which are also subject to review by Ernst & Young.
So on the presumption that both management and Ernst & Young know what they're doing, I think we should be OK on the matters you raised. But by all means correct me if I'm wrong.
As I've posted before this has been virtually my best investment over the last few years with a an annual compound rate of return well in excess of 30%pa.
However all the stats show that the market is slowing and house price growth is tailing off -- and what worries me is the extent to which the Gross Margin for housebuilders is dependent on "holding gains" ie the houses they are selling now are built on land purchased 2, 3, 5 years?? ago and that land would have been purchased based on expected selling prices at the time the land price was negotiated.
So do we know how much of the margin is just a "holding gain" ? The problem is of course that if house prices hold steady over, say, 3 years then the holding gains evaporate. Or worse still if the land buying team had built-in an assumption of ongoing house price inflation.
So to me this element of the financial performance of is opaque. Can anyone cast any light on this or know if the "holding gain" is disclosed anywhere in the financial presentations.
The government has recently berated the housebuilders for not building out their land bank quickly enough and at least one major housebuilder CEO said that capacity constraints meant they couldn't do it more quickly. For which the read across is probably "why would we want to destroy our business model and help drive prices down"
Having just gone through the 2017 annual report I noted the following highlights:
Housebuilding output is hitting up against human and material resource constraints which PSN has anticipated through its Brickworks and Space4 manufacturing operations and its also getting into manufacture of roof tiles for 2019.
CEO Jeff Fairburn and CFO Mike Killoran are mitigating their bonuses with £50m voluntary reduction, charitable donations and commitment to employment longevity. They didnt have to do that but Im awfully glad they did.
The Capital Return Plan has been upward only since inception. What began as a <110p annual dividend has become a 110p + 125p = 235p annual dividend promised for each of the next three years resulting in a monster yield of 9% based on todays share price. And it would not be unfeasible that this could be revised upwards yet again in future years because annual cash receipts of £800m after tax with negligible debt can easily fund the new £726m annual dividend without touching the £1.3 billion cash cushion. I dont think the wider market is aware of the strength of this yield as the 2017 numbers are still hot off the press. For instance iiis Analysis/Fundamentals tab shows PSN as having a zero dividend yield. So readers on this board have a temporary advantage until the databases catch up with the figures.
The only thing I did not like in the annual report was a 3 star customer rating instead of 4 or 5. Not sure why but guess it relates to after-purchase snagging. Any ideas anyone? Hope to see that improve.
I remain a fan of the board and management team for their market and supply chain foresight for which we are now reaping the benefits; and for their generosity towards shareholders. PSN are a newly unfolding case study in forward-thinking and have redefined what capital discipline really means. Which is? Allocate capital to market needs (in this case sales offices and vertical supply chain) as priority one and pay out anything over and above that to the management and shareholders as priority two. They have done both exceedingly well.
PSN are now outshining my other favourite company: Berkshire Hathaway has been sitting on over USD$100 billion cash for a long time now effectively generating negative returns without paying a cent to shareholders. That is starting to look like capital indiscipline.
We should be proud of PSN as a great British company.
I hope you dont mind if I respond to several of those points in a single post
BubblingUp. Yes the £4.35 entry price was prescient in hindsight (haha see what I did there). But at the time PSN was on a PE of 12 and dividend yield of 2%. What management have done in the intervening years has been a remarkable turnaround by aligning the workforce and structurally integrating the supply chain to accelerate production at lower cost as seen in steep improvements to top and bottom lines as well as free cash flow. While management have lined their own pockets they have also been extremely shareholder-friendly. Jeff Fairburn has been at the helm for most of that time so I am exceedingly thankful for his efforts. Ironically both those metrics PE and Div Yield are slightly BETTER at todays price. On BRK, please come and join us on the BRKA board where we could do with more posters.
Cavebear. PSN is still worth buying IMHO as the price has dropped and is on a PE of around 11 and dividend yield of 9% by my calcs. Whats more, that dividend yield is sustainable. Have a look at PSNs recently released balance sheet (link below). They have £1.3 billion in cash. No borrowings. They have been generating after tax free cash flow of +£500 million each year. Very few companies tick all these boxes, especially at a 9% yield. I dont know of any.
Here is the link to the recently released financial statements:
Dutchman. Thanks for sharing that valuable learning point. You have my sympathy and empathy. A divorce cost me +50% plus huge emotional blow. There was nothing positive about the destruction of our family unit. Families are the basic living cells of our society yet family law encourages divorce by rewarding the partner who wishes to exit.
What would be the point in buying now in anticipation of what is effectively a special div. If you are unable to do it within a tax free environment, you will merely be getting (a portion) of your own capital back and be taxed on it for the privilege.
"It could have been so different. If our Dogs hadn't included LSE:CPI:Capita, the troubled outsourcer whose share price plummeted at the end of January after it issued a profits warning, we would be trumpeting yet another year of outperformance ..."
Apace, I may have done well on a few shares, but believe it or not my overall Housebuilders portfolio over the years is barely better than break-even..... WHY ? well the reason is that on Brexit vote day I stayed up till about 3:00am, by which time the result was fairly clear in my mind. I then went on to II, and other platforms and set sell orders for other housebuilders without setting a limit..... BIG MISTAKE. The ones held where the platform managed to operate in the market panic that ensued sold for 50% of the previous days price. Yes the real drop was 50% or so in those first few minutes. Anyone who bought my shares made 30% in the day! Lesson ...... dont panic.
Strangely enough aspace, before I read your post I was debating with myself whether to add more PSN when it was down earlier this morning, or make an initial investment in BRKB. I went for the latter on the basis of steady growth and an interesting stock. If only I could have got your amazing 2011 price on PSN!
Sounds like you have done well on several shares there, Dutchman.
Prompted by your posting I checked my own compound average on PSN since buying in early 2011 at £4.35 and came pretty much spot on the same as your average all-inclusive compound gain of 36% per annum. I then doubled my holding about a week or so ago when the price was at £24.23. So today was a very happy one.
My next best is Berkshire Hathaway which tends to reliably increase 10-15% per annum with no dividend. Has also been a good USD hedge against Sterling. So I cannot match your record of several excellent picks. PSN is the one and only stand-out in my portfolio.
But I don't mind because once I settle on a share I invest heavily (in the context of my little world) which in turn magnifies the gains. Although it does reduce my diversification.
Sure the CEO has milked it and it does reflect badly on board governance. But I cannot manage PSN and he seems to be doing a pretty good job of it. Having committed my capital, PSN has given it ALL back plus extra. Which is more than I can say for Lloyds Bank and a few other of my holdings.
My curiosity was aroused by Aspace's reference to this being the best share he ever bought. I thought I would check against my holdings. I bought Persimmon in late August 2012 and to the end of January 2018 it had returned just shy of 36% compound annual growth including all divi's, returns of capital etc. Comparing it to any of my other holdings owned for all of the same period it was only beaten ( just) by Exel, a French Agri machinery company originally tipped my Merryn in the Saturday FT. Within a whisker was also Porvair, and also slightly beating it was TR European Growth IT, but in this case I added heavily to my holdings about 2-3 years ago which distorts the comparison.
With a P/E under 13, a forward yield of nearly 9% with the special dividend, loads of cash in the bank and plenty of land to build on these must be worth considerably more than the current price. After understandable profit-taking I'm hoping they'll fly some more.
Well done Aspace. You sound a bit cheerier than in your last post. I had only just realised the SP had fallen below my previous buy price and was mulling where I could raise funds for another buy when I saw the RNS this morning . Too late already! Never mind, I am looking forward to about as much in dividends (for 3 years at least) as I would have made had I doubled my stake and the dividend had been frozen.
Could this have been a little bribe sorry sweetener from the CEO to calm the minions fury about his self-enriching bonus plan? If so, it could just have worked.
What struck me as odd here was that PSN gave an unambiguously positive trading update in January yet the share price still dropped to £24. As I said in my last post this was an unjustified price drop for a company with loads of cash that has consistently delighted shareholders for each of the past several years.
Insiders were prohibited from buying as it was a close period. So we retail investors had the price drop to ourselves.
On top of today's 11% price rise we have also been promised an extra 125p dividend in March in addition to the usual 110p dividend in July.
Yet we see little positive press for this corporate cash-gusher.
Those of us following this board can have this little baby to ourselves. PSN has been the best share I ever bought.
Surprised nobody posted a message after share price rose over 11% this morning. Excellent results. I am very satisfied and pleased that PSN is my second largest, no after today's rise now my largest value share holding. Some key points from results:
"In addition, the Board is pleased to confirm that the scheduled capital return of 110 pence per share, or c. £340m, will be paid, subject to shareholder approval, on 2 July 2018 as a final dividend in respect of the financial year ended 31 December 2017"
"Following this further improvement of the payment schedule the total value of the Capital Return Plan is estimated to be c. £4.1 billion or £13.00 per share, over double the original plan value of £6.20 per share"
Nice to know shareholders will get a goodly share of profits as well as executives.
Interesting article in the Weekend FT by Merryn Somerset Webb on charitable giving.
"If, for example , Jeff Fairburn, the newly super-rich chief executive of Persimmon, hands over £10m of his bonus to charity his gift will cost the treasury - hence the rest of us - £5.65m"
Worth a read anyway IMO. I am not happy with the amount money the government forks out to charities a lot of them being religion based. Many are are not IMO worthy causes. Merryn titles article "Britain's charitable giving model undermines democracy".
As often happens, I top up and the share price goes down.
Well, I've done it again as the share price has dropped and PSN has now become my second largest investment.
It seems strange the share price is languishing around 24 at a PE of only 11, strong cash generation and 1.b billion in the bank. What's not to like? Hence I've made a big commitment - in my little world at least.
I look forward to the year end results on the 27th Feb.
"I know companies that do lose or even have a significant vote against a remuneration package acknowledge the fact and say they will take it into account; I don't ever remember reading a company actually DID change the package"
A rare thing I agree, but it has happened
CEO Bob Dudley's total pay package for 2016 was cut by by an eye watering $8 million to a derisory $11.6 million. Poor Bob, not sure how he got by, but no doubt it will balloon again as oil price rises (for which he deserves all the credit I'm sure).
For better or worse, I topped up on current price weakness, getting in at £25.82 so had already made an immediate loss at the closing price of £25.71.
By my calcs this puts PSN on a PE of 11.5 with dividend of 4.3% which makes it too modestly valued in my view given that in the Jan 2018 prelim announcement it appears PSN is meeting the nation's demand for new housing, sales are up and they anticipate profits will beat market consensus. So I estimate a profit after tax of approx £700m. Hopefully a little more.
Since the 2012 capital efficiency strategy was launched PSN has outperformed strongly year after year. The capital return plan was BOTH accelerated AND increased in 2016. Today we are poised to receive £1.10 in Jul 2018. Last year they kindly gave us an extra interim dividend of 25p. Fingers crossed for this year.
Unlike the past behaviour of banks, PSN is a company doing precisely what we want companies to do: make and sell stuff that's needed.
With Britain's continuing need for housing I don't see that situation changing in the foreseeable.
Unless CEO Jeff Fairburn's super-sized bonus resulting in chairman Nicholas Wrigley's resignation results in further bad publicity.
And in addition to what "Hang..." said, I think the government would have to make the vote on directors remuneration binding instead of advisory. I know companies that do lose or even have a significant vote against a remuneration package acknowledge the fact and say they will take it into account; I don't ever remember reading a company actually DID change the package. I know some sort of fall-back proviso would have to be made in any legislation but at the moment even if we muster enough votes, the board of any company can effectively ignore it.
I'm puzzled by a lot of things surrounding this crazy bonus scheme that our directors, in their wisdom, voted in (although they are supposed to be working with shareholder interests at heart).
1) I know the Chairman and head of remuneration have resigned because of the sheer generosity of the scheme, but surely they must have known how these bonuses have been building up over the past few years. Couldnt they have acted sooner?
2) Why has Jeff Fairburn, & other beneficiaries, not also resigned in embarrassment at taking such a disproportionate reward for their efforts, or why hasnt he offered to take just a proportion of the bonus, even 25% would still be a nice little earner.
3) Why has the board of directors not determined that the negative press relating to these payments has caused a downturn in the sp. They could actually rectify the situation by persuading the recipients to forego at least some of the bonus payments in order to, in part at least, counteract the sp drop, so actually doing what they are paid for (& receive bonuses for) and work in the interests of the shareholders!
As a shareholder I fear a backlash from the government. Theres nothing they like better than punishing greedy directors, especially when its a vote-winning move. Anyhow, as a consequence and even though Im a very long term holder, I am planning to reduce my holding in PSN by at least 50% over then next few months.
Regarding the disenfranchising of private shareholders due to shares being held in nominee accounts, so making voting on remuneration difficult, I think that it makes little difference, since private shareholdings are such a small overall percentage of most companies total equity. Even if we were all to vote against a remuneration package it would still be voted through because of institutional holdings (pension funds, investment trusts, unit trusts etc), even though most of the underlying beneficiaries are also private investors. IMO there would need to be more radical change along the lines that the weighting of votes from these institutions would be reduced considerably ... dont see it happening of course!
The considerable negative publicity Jeff Fairburn has attracted also makes Persimmon a target of the politicians who may now choose to use Persimmon or the housebuilding sector generally as a bad example of corporate excess particularly given its connection to 'help to buy'. A positive has been turned into a negative.
Thanks for that info I shall make it a priority to email Stephen and make views known.
Perhaps more investors on this board and others should also follow suit to add a bit more impetus to a Shareholder Spring.
It is not exactly Maggie's view of shareholder democracy where a wider pool participate in the capitalist sytem as investors but it might just give us our voice back.
It seems we are not alone in wanting to exert a little more control over the companies we ultimately own as this recent article from Moneyweek argues.
I agree with the sentiments re Director's bonus scheme. The scheme was designed and agreed some years ago, maybe 5 maybe 8 I cant remember and was all linked to the large dividends/return of capital we have been receiving, the cost of the bonuses would have been charged against profits over the intervening 5/8 years. Having said that it was stupid not to have included a cap on the level of bonuses.
With regard to Nominee accounts and votes and receiving annual accounts etc. it does seem to me that we are effectively being disenfanchised.
The organisation to email is The Financial Reporting Council who are responsible for the Corporate Governance Code,the Stewardship Code and many other aspects of corporate reporting. Write to Stephen Haddrill Chief Exec whose email address is; [email protected]
Don't complain about this particular bonus but just how the nominee shareholding system disenfranchises private investors and means that comapny directors cannot be held to account.
You may think this will make no difference, but they get so few comments from real private investors, it will - believe me! Go on it's worth 5 minutes.
charlus "..obscene level of pay that has been granted to CEO and others"
I too was horrified by the huge size of bonuses. A large proportion of shares are owned by institutional investors. They should be more diligent about agreeing to over generous bonus schemes.
PI who own shares through a nominee account can exercise their voting rights by instructing their broker company how they wish to vote. I have done this on several occasions with my broker Charles Stanley Direct. All shares in ISA's I believe are held in nominee accounts.
There is a catch however as at the moment shareholders can vote against a remuneration package but the company is not bound by a vote even if shareholders do vote it down.
I have to say I am very surprised that there has been no comment or discussion on this Board about the obscene level of pay that has been granted to CEO and others.
Even the Chairman and head of the renumeration committee were sufficiently embarrassed by their own incompetance to resign from the Board.
£800m bonuses to be divied up amongst execs with a staggering £109m going to Fairburn alone.
THIS IS OUR MONEY FFS !!
Sadly, as most now have nominee accounts we seem to lose our right to exercise our vote at AGMs and veto outrageous bonus plans.
This is the unacceptable face of capitalism.
I am not a big fan of Government intervention but a simple rule change to allow shareholders with nominee account to retain their right to vote and make their voice heard as owners of the company would surely be a step in the right direction.
"2017 has been a strong year for the stockmarket, but not all investment strategies have done well. Given the bullish conditions, it's probably no surprise that "value" investing in the market's cheapest shares has not generally paid off. But good ..."
"This budget was always going to be especially tricky for the chancellor. Hitting fiscal targets amid wide divisions over Brexit, while also spending more on populist policies to distract voters from Conservative party infighting and dysfunctional ..."
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