AGM alert: housebuilder to tackle ‘controversial topic’

Executive pay in the housebuilding sector returns to the spotlight next month when FTSE 250-listed Bellway (LSE:BWY) asks shareholders to approve a new remuneration policy.

It is ditching the use of a conventional Performance Share Plan for long-term incentives, having seen an average vesting of 46% over the past decade and nothing in the past three years.

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The builder is planning to switch to Restricted Shares, which offer greater certainty of vesting but come with a maximum grant half the opportunity seen under the current policy. 

The remuneration committee said: “We are conscious that executive pay has been a controversial topic in the sector over the years and see benefits in reducing the maximum available quantum while remaining market competitive.”

Jason Honeyman, who has worked for Bellway since 2005 and has been its chief executive since 2018, got total remuneration of £1.7 million in the 2023-24 financial year.

In 2018, Persimmon (LSE:PSN) was at the centre of a pay storm when share price growth led to chief executive Jeff Fairburn getting awards worth £110 million, later reduced to £75 million.

Associated British Foods

When: 11am, Friday 6 December.

Where: Congress Centre, 28 Great Russell Street, London WC1B 3LS.

How to participate: A live broadcast is available for Associated British Foods (LSE:ABF) shareholders unable to attend the meeting, although it will not be possible to ask questions or vote using this facility. Questions can be submitted in advance by post or email, with the deadline for the return of proxy voting instructions no later than 11am, Wednesday 4 December. More AGM details can be found here.

Who’s in the chair? Michael McLintock, the former M&G chief executive, has been in the role since April 2018.

How did the company do in the year to 14 September? Revenues rose 2% to £20.1 billion, led by growth in the Primark retail division and food businesses. Adjusted pre-tax profit rose 33% to £1.96 billion and adjusted earnings per share by 39% to 196.9p. A final dividend of 42.3p a share is due to be paid on 10 January, the same day as shareholders receive a special dividend of 27p a share. The total for the year of 90p a share is up from 60p the year before.

How have shares performed? Up 4% to 2,189p (2,171p on Thursday).

How much is the boss paid? George Weston’s salary for the 2024-25 financial year has increased by 3.6% to £1.25 million. His single figure of remuneration in 2023-24 topped £6 million, up from £4.3 million the year before and the highest sum of the past decade. This figure included cash and deferred shares worth £2.1 million based on an annual bonus worth 85.63% of the maximum. The 96.75% vesting of long-term incentives contributed £2.8 million.

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How was variable pay determined? Financial measures, specifically adjusted operating profit and working capital, account for 85% of the annual bonus scheme. The rest is based on strategic targets, currently all related to ESG. Reflecting the strong post-Covid recovery, earnings per share for the 2021-24 long-term incentive scheme was ahead of the target set.

Why was discretion used? The remuneration committee said the cost of restructuring actions in a number of businesses was greater than anticipated when budgets were set. The committee reviewed all of the actions taken and determined that it was fair and reasonable to make an adjustment, but that this would be made only for a portion of the additional costs. This had the impact of increasing the overall bonus outturn from 82.43% to 85.63%.

How did last year’s AGM go? The annual remuneration report was approved with 99.69% of votes in favour.

How’s the company doing on diversity? Women accounted for 44% of board roles at the end of the financial year, rising to 50% following this month’s appointment of Loraine Woodhouse. There is one woman in a senior role and the board continues to have at least one person from an ethnic minority background, in line with the Parker Review.

Bellway

When: 8.30am, Thursday 12 December.

Where: Woolsington House, Woolsington, Newcastle upon Tyne, NE13 8BF.

How to participate: Proxy voting instructions should be returned no later than 8.30am, Tuesday 10 December. More AGM details can be found here.

Who’s in the chair? Former Redrow chief executive John Tutte was appointed in April 2022.

How did the company do in the year to 31 July? Completions fell 30.1% to 7,654 at an average selling price of £307,909, resulting in a 30.1% fall in revenues to £2.38 billion. Underlying pre-tax profits dropped by 57.5% to £226.1 million and earnings per share by 58.8% to 135.2p. The total dividend for the year fell in line with earnings to 54p a share, including the final dividend of 38p a share which is due for payment on 8 January.

How have shares performed? Up 31% to 2,866p (2,442p on Thursday).

How much is the boss paid? The base salary of Jason Honeyman has increased 4.5% to £799,814. His single figure of remuneration amounted to £1.7 million, up from £1.1 million following the award of an annual bonus of £826,602 based on 90% of the maximum opportunity. The bonus reflected an above-target underlying operating profit figure of £235.8 million and the achievement of strategic objectives. Share awards granted in 2021 lapsed after thresholds were not met for underlying earnings per share in 2023/24 and relative total shareholder return versus peer housebuilders and the FTSE 350.

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What’s in the new remuneration policy? The biggest change to the policy approved in 2021 with 96.95% of votes in favour concerns plans to replace the annual grant of long-term performance shares with Restricted Shares, which offer greater certainty of vesting. The maximum grant will be half the opportunity under the current policy. The annual bonus opportunity will be increased from 120% to 150% of salary and the payout at threshold for financial performance will be reduced from 40% to 25% of maximum. In-employment shareholding guidelines will be increased from 200% of salary to 300% and a quarter of any bonus paid will be deferred into shares for three years.

Why the change to Restricted Shares? The proposal removes the volatility that Bellway has experienced in vesting under the Performance Share Plan. The average vesting of the last ten years has been 46% of the award, including zero in the past three years. Restricted shares ensure that awards change in value in the same proportion to the returns created for shareholders over each three year period. Awards will only be eligible to vest subject to the remuneration committee being satisfied that performance is in line with long-term goals. The committee adds that Restricted Shares are simpler and easier to understand. It said: “We are conscious that executive pay has been a controversial topic in the sector over the years and see benefits in reducing the maximum available quantum while remaining market competitive.”

How did last year’s AGM go? The annual remuneration report was approved with 98.84% of votes in favour.

How’s the company doing on diversity? The seven-strong board has three female directors, including in one senior role. The company also meets the recommendations of the Parker Review on ethnic diversity. 

Volution

When: 12 noon, Wednesday 11 December.

Where: Norton Rose Fulbright, 3 More London Riverside, London SE1 2AQ.

How to participate: Proxy voting instructions should be returned no later than 12 noon, Monday 9 December. More AGM details can be found here.

Who’s in the chair? Former Diploma finance director Nigel Lingwood joined the board as a non-executive director in April 2020 and became chair in June 2023.

How did the company do in the year to 31 July? The FTSE 250-listed designer and maker of energy efficient indoor air quality solutions grew revenues by 6% to £347.6 million. Pre-tax profits lifted 15.9% to £56.6 million. Adjusted earnings per share were 28p, an 8.5% increase for compound annual growth since the IPO in 2014 of 12.3%. A final dividend of 6.2p a share is due to be paid on 17 December, resulting in a 12.5% increase in the total for the year to 9p a share. 

How have shares performed? Up 37% to 547p (551p on Thursday). Total shareholder return (TSR) exceeded that of the FTSE 250 index, and over a three-year period Volution Group (LSE:FAN) ranked first for TSR against its peer group.

How much is the boss paid? The base salary of Ronnie George increased in August by 4.5% to £579,975. His total remuneration for 2023/24 amounted to £2 million, which included cash and shares worth £694,000 after he received the maximum bonus award. The 79.5% vesting of long-term incentive awards granted in 2021/22 contributed £695,000 to the overall total.

How was the level of variable pay determined? Adjusted operating profit, adjusted earnings per share (EPS) and working capital management were the measures used by the remuneration committee to assess the annual bonus outturn. EPS growth, performance against ESG targets and total shareholder return over the three year period were used for the vesting of long-term incentives. None of the value of the award was attributable to share price appreciation.

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Why the big fee increase for the chair? Nigel Lingwood, who joined the board in 2023, will receive £200,000 for his board duties. This compares with the £164,216 paid for the role in 2023/24. The remuneration committee points out that there have been no material increases to the fee since the 2014 IPO and, since that time, the group has become significantly larger, more complex, and more international. This means responsibilities and time commitments of the role have materially increased. The new fee remains below the FTSE 250 lower quartile, with the committee’s intention to make it more market aligned over the coming years.

How did last year’s AGM go? The new three-year remuneration policy was approved with 97.73% of votes in favour. The annual remuneration report got 91.86% support.

How’s the company doing on diversity? Over 40% of the board is female, including one senior role. In addition, one board member was of a minority ethnic background.