Although the company explained why it believes Mills is independent, Manifest’s analysis highlighted his senior role with the company’s financial advisor, Citigroup Global Markets. Mill’s appointment now means that less than 50% of the board is now independent – which raises questions about the composition of the remuneration committee of which he is also now a member.
Following the release of the AGM’s voting results Persimmon said, “the Board notes the significant vote against the election of Nigel Mills as a non-executive director and is aware that it is as a result of a proxy advisory service recommending that shareholders vote against his election, as they do not regard him as being independent. The board strongly believes that Mr Mills is independent and his appointment is in line with the provisions of the UK corporate governance code. He has not worked on the company’s business in the last three years and has no other business relationships which would compromise his independence. Nevertheless given the significant minority who have voted against the resolution the chairman intends to meet shareholders to discuss this issue with them.”
Commenting on the announcement, Manifest CEO Sarah Wilson said: “Persimmon is shooting the messenger. To suggest that shareholders have unthinkingly followed voting recommendations shows a lack of informed judgement on the part of the board and shows a lack of understanding about the nature of investor stewardship and engagement. The issue is Persimmon’s governance, not the research.”
In addition to board composition issues, including Davies’ reform diversity concerns, Manifest’s research also raised significant concerns surrounding pay governance, notably the successive years of maximum bonus payouts and single performance metrics. Overall, Manifest has ranked Persimmon’s pay as a D grade on its remuneration governance framework. The remuneration report vote received 91% support, around the average level of dissent in the UK market. However, in 2013, the advisory remuneration vote only managed to achieve 78.04% support and was one of the highest dissenting votes in that year..
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