New Bovis chief’s pay deal draws City warning

Business & Economy 01 May 2017
New Bovis chief’s pay deal draws City warning

Troubled housebuilder Bovis draws City anger over new boss's pay

A top City voting adviser has issued its strongest possible alert over Greg Fitzgerald's pay package, Sky News learns.

Image: The housebuilder rejected takeover approaches from rivals Galliford Try and Redrow

By Mark Kleinman, City Editor

Bovis Homes, the troubled housebuilder, faces fresh controversy after‎ the pay deal of its new chief executive drew criticism from one of the City's top voting advisers.

Sky News has learnt that the Institutional Voting Information Service (IVIS), which is part of the fund management industry's leading trade body, has issued a 'red-top' warning to investors ahead of Bovis's shareholder meetings on Tuesday.

The move threatens to heap new embarrassment upon one of Britain's biggest housebuilding firms after a string of mishaps which led to the ousting of Mr Fitzgerald's predecessor, David‎ Ritchie, earlier this year.

IVIS has told investors that they should exercise their "commercial judgement" at a special meeting of Bovis's shareholders being held to approve Mr Fitzgerald's remuneration arrangements.

In addition to a ‎£650,000 salary, he can earn several million pounds in bonus awards, including 100% of his basic pay in an annual bonus payable in shares and deferred for three years.

A long-term award comprising double his salary for each of Mr Fitzgerald's first two years in the job will also be available to him, along with a share award worth a further £650,000 to "compensate [him] for relinquishing management of certain investments in order to take up this role".

IVIS has raised concerns about the elements of Mr Fitzgerald's package which fall outside Bovis's previously approved remuneration policy.

‎"Shareholders will have to be satisfied that such an award is appropriate and necessary, as it is in addition to the exceptional LTIP award to be granted in 2017 and 2018, and Mr Fitzgerald is currently not in an executive position," a note circulated to IVIS's clients said.

The warning does not amount to a recommendation to vote against the award, but nevertheless is expected to influence the voting decisions of some investors.

It comes after Bovis rejected takeover approaches from rivals Galliford Try and R‎edrow, with the company left reeling by the emergence of claims that it was offering cash incentives to families to move into unfinished properties in order to hit sales targets.

A source close to Bovis said the company anticipated "overwhelming" support for Mr Fitzgerald's pay package, with roughly 90% of shareholders expected to vote in favour.

The vote will take place amid intense pressure on corporate boardrooms to demonstrate pay restraint in the weeks leading up to the General Election.

During the current AGM season, AstraZeneca, Drax and Thomas Cook are among the companies to have been hit by strong rebukes from shareholders over executive remuneration.

Bovis declined to comment on Monday.

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