Bovis Homes has suffered a sizeable shareholder revolt over the pay package it awarded its interim chief executive for fighting off two hostile takeover bids and steadying the business after a scandal over badly built homes.
At the housebuilder’s annual meeting at the Spa Hotel in Tunbridge Wells, 37.6% of shareholders voted against the Bovis remuneration report but it was passed with the backing of 62.4% of investors.
Bovis has been trying to turn itself around ever since its shock profit warning at the end of 2016, when it was accused of paying thousands of pounds in cash incentives to persuade buyers to move into unfinished homes riddled with defects to meet ambitious targets.
This prompted the departure of its chief executive Dave Ritchie, who was replaced by Earl Sibley, the finance director, until the arrival of industry veteran Greg Fitzgerald in April 2017. Bovis lured Fitzgerald with a three-year pay and shares package worth up to £8.1m.
As the scandal widened, Sibley set aside £7m to fix defects, met angry homebuyers and scaled back the construction of new homes to get to grips with the problems. He also fended off takeover bids from rivals Galliford Try and Redrow.
Bovis said much of the shareholder concern related to its decision to raise Sibley’s 2017 bonus by 15% to £258,000, taking his total annual package to £661,000, and by granting him an exceptional long-term incentive award worth £243,750 this year. Sibley returned to his previous role of finance director when Fitzgerald took over.
Alastair Lyons, chair of the remuneration committee, said: “The committee’s priorities were to ensure that the company’s remuneration arrangements were fully aligned with the business and incentivised the successful delivery of our challenging turnaround plan, while also ensuring that they were fair and reasonable both for the executives and shareholders, in what was an unusual year.
“We recognise, however, that a significant minority of our shareholders have expressed their concerns about the arrangements we put in place and going forward we will continue to seek full shareholder engagement.”
A number of homebuyers, including some who bought Bovis homes last year, have told the Guardian they still have problems ranging from minor issues to more serious structural faults. Bovis faces a potential class-action lawsuit from a group of buyers.
Dave Howard, who with his wife Ann set up a Facebook group for disgruntled Bovis buyers and sits on the company’s homebuyers panel, created last summer, said: “Bovis need to resolve their customers issues before they pat themselves on the back and award themselves larger bonuses.”
He added: “The progress made by Earl Sibley doesn’t appear to have been continued under the new leadership. The way they treat customers certainly hasn’t improved, based on our personal experience and the experiences of a large number of members of our 3,000-strong Facebook group.”
He said the couple was personally in dispute with Bovis over the findings of a structural survey the company recently commissioned on their property but has, as yet, refused to act upon.
Several other companies have faced shareholder revolts over executive pay in recent weeks, including the fellow housebuilder Persimmon, the drugmaker AstraZeneca and the consumer giant Unilever.