Bovis faces shareholder revolt over pay

The management of housebuilder Bovis is facing a possible shareholder revolt over senior pay packages at next week’s special general meeting convened to approve its £1.7bn takeover of Galliford Try’s housebuilding business.

Shareholders of housing business Bovis are being urged to vote against the proposed pay packages because of concerns the plans give too much discretion to the business to award bumper bonuses to senior management such as chief executive Greg Fitzgerald (pictured).

Responsible investment adviser ISS has told its clients to vote against both the remuneration package and the planned long-term incentive plan (LTIP) for senior managers being proposed at the crunch meeting on Monday.

In a briefing to clients, it said “significant issues” had been identified with the proposed remuneration arrangements for the enlarged business post-takeover, including the fact maximum awards under the LTIP had increased to up to two times salary, and that “overarching discretion” would be granted to the business “which may potentially be used to increase award level excessively”.

Another investor advisory business, IVIS, has also given the remuneration and LTIP votes in the meeting an “amber” warning light to shareholders – meaning there are significant issues to be considered

This week, Sky News reported that several unnamed institutional investors were indeed planning to vote against the pay plans. Sky did not claim to know if a majority of shareholders are planning to vote down the pay proposals.

Monday’s meeting is vital for the business in its bid to pull off the purchase of Galliford-owned Linden Homes and the firm’s housing partnerships division. If it goes through, the deal will turn Bovis into a top-five UK housebuilder with the capacity to build more than 12,000 homes a year.

A Bovis spokesperson told Sky News the revisions to its pay policy were reflective of the “transformational” nature of the deal, and that it had received “clear indications of support, including from a number of our major shareholders”.

“The fact that we recently raised £150m through a heavily oversubscribed placing to part-fund this transaction, the bulk of which came from our existing shareholders, is the strongest indication of the significant support we have for this deal,” they said.