Companies in the news ... and how they were assessed
Persimmon: rip-offs and bonuses
Jeff Fairburn, CEO of housebuilding giant Persimmon, is expecting a bumper payday this year, said the Daily Mail. He’s due to be handed a package of shares currently worth around £112m as part of a long-term incentive plan. The award – “one of the biggest in UK corporate history” – is all the more controversial because Persimmon’s “recent success” has been built on the sale of “rip-off” leasehold contracts, and the Government’s Help to Buy scheme. Buyers signing up for leasehold deals (Persimmon’s run for 999 years) must continue paying ground rent and maintenance fees, which rise sharply as the decades go by. The Government’s planned clampdown on the sale of leasehold homes under Help to Buy could have a “significant impact” on Persimmon, whose profits have more than trebled over five years, to £782.6m in 2016. No wonder investors want to curb Fairburn’s bumper bonus, said the FT. When the builder’s scheme was hatched in 2012, the projected value of his shares was only around £12m. A rising stock price has seen their value mushroom – causing investors to fret about the scale of the eventual payout and its “dilutive effect” on their own stakes. Several companies, including Reckitt Benckiser and WPP, are now tweaking or redesigning their pay schemes to make them less generous. This could be the “last hurrah” of high-paying, long-term bonus schemes.
M&s/ocado: timely deal
“The already skimpy margins at British supermarkets will come under pressure soon, as currency hedging arrangements expire and the full impact of the weaker pound ripples through the supply chain,” said Iain Dey in The Sunday Times. That’s bad news for M&S, which currently imports more than 90% of its clothing, and 35% of its food. But at least the chain seems to be looking to the future. Following “years of resistance”, M&S is contemplating a move into online grocery delivery to meet customer demand for its popular ranges of upmarket food, said Ashley Armstrong in The Daily Telegraph. Shares in Ocado jumped by some 9% following reports over the bank holiday that it could be the partner chosen to secure the deal. Ocado was recently disappointed when its long-standing supermarket partner, Morrisons, struck a delivery deal with Amazon Fresh. The new move would have the added benefit of reuniting it with an old friend. Ocado’s chairman, Sir Stuart Rose, was at the helm of M&S when it explored a full takeover of the online grocer, before the latter listed on the stock market in 2010.
Jimmy Choo: Coach class
“Jimmy Choo, which rose from humble origins in a Hackney cobbler’s workshop to become one of Britain’s best-known fashion brands, is up for sale,” said Conor Sullivan in the FT. The luxury shoe company, which was made famous by the US comedy series Sex and the City, is now “struggling to retain the cachet it held in the early 2000s”; its current majority owner, the German investment group JAB Luxury, wants to cash in its stake in order to focus on food and other consumer goods. The news prompted Jimmy Choo’s shares to hit a record high, valuing the company at around £720m. Who’s in the market, asked The Sunday Telegraph. The front runner looks to be Coach, the US handbag giant with upmarket ambitions, which has been scouring the world for luxury brands since last year’s failed £20bn tilt at Burberry.