Almost 40% of investors voted against an almost £1m bonus for the chief executive of Foxtons at its annual general meeting yesterday (22 April).
Chief executive of the estate agency chain Nick Budden will still receive a short-term bonus of £389,000 and more than £500,000 in shares because despite the revolt by shareholder groups, their votes did not reach the 50% needed to block the plan.
The board of Foxtons has, however, promised to review pay in the coming months.
Pay planning and furlough
Shareholders pointed to the fact that the company had taken around £4.4m in support from the government’s furlough scheme during the pandemic, as well as £2.5m in business rates relief.
Rival companies such as Winkworths have repaid furlough money after a stamp duty holiday put in place by the government led to a rise in property sales.
In a statement accompanying its annual results, the board noted that “a significant number of votes were cast against Resolution 2”, which refers to the remuneration policy agreed at its previous AGM in 2020, at the time approved by 79% of shareholders.
“It is clear that a significant proportion of shareholders did not agree with the decision to pay bonuses to executives under the Bonus Banking Plan, on the basis that the company had benefited from government support,” it said.
“This is notwithstanding that discretion had been exercised to reduce bonuses that would otherwise have been earned against agreed performance conditions by 50%, a decision that was supported by the majority of voting shareholders.
“This resulted in a bonus for the CEO of £389,000, which was 33% lower than the previous year and 53% lower on a cash basis.However… the remuneration committee will review the remuneration policy and its implementation in consultation with shareholders to ensure executive remuneration drives long-term shareholder value and stakeholder interests.”
Catalist Partners, an ‘activist’ investor that holds a 2% stake in the estate agent, said the significant number of shareholders voting against the bonus plans should be seen as a “wake-up call for the board”.
“The company’s leadership should rightly be rewarded, but for clear outperformance, not just riding the wave of a market recovery. The board must act,” the company said.