Anger over ‘appalling’ bonuses
Jan 6 2009 by Karen Dent, The Journal
A UNION leader has described housebuilder Bellway’s decision to hugely increase the size of bonuses to its top three directors in the same year it axed more than a third of its workforce as “quite appalling”.
The rises came after the Newcastle company’s board reviewed of the size of their bonuses last year to reflect directors’ work to respond to the “genuinely exceptional circumstances” of the credit crunch which included shedding hundreds of staff.
The company said the “management’s own performance had been very good in extremely challenging conditions.”
John Scott, from construction union UCATT, spoke out after the Association of British Insurers (ABI), which represents major investors, said it expected serious concern to be raised about the high bonuses at the builder’s annual meeting on January 16.
Bellway paid the bonuses – a total of £632,500 which is equal to 55% of the top three director’s annual salaries – despite the company’s annual pre-tax profits slipping by 30% to £165.7m. An update last month showed annual sales had fallen by more than 50% on the previous year.
The group axed 850 of its 2,500 UK staff last year, including 160 in the North East, and reduced the number of its divisions from 18 to 13.
Mr Scott, UCATT’s regional secretary, said: “It’s quite appalling but I’m very surprised that Bellway have moved in this direction. In fairness, unlike a lot of other housebuilders, they consulted well with unions over the job losses.
“But they have blotted their copybook big style and devalued those consultations. It’s an insult to those workers, a lot of them had worked for the company for years. They will feel absolutely disgusted that bonuses of this nature are being thrown about.”
The staff cuts are expected to result in a net overhead saving of £8m in Bellway’s current financial year, which ends of July 31.
The builder’s annual report and accounts, which revealed the massive bonus payments – said “the primary operational focus of the group has changed during the course of the year to cost control and cash management”.
The bonuses were agreed by a committee headed by former Northern Rock chief executive Leo Finn, who also previously served as chairman of Northern Recruitment Group (NRG).
Mr Finn has been chairman of Bellway’s board committee on executive directors’ remuneration, which decides how much the executive directors are paid, since 2003. He is stepping down as Bellway’s senior independent non-executive director at this month’s annual meeting after 13 years with the company.
Bellway declined to comment.
UCATT’s anger was echoed by investors at ABI, which has issued “red top” warning ahead of Bellway’s agm. ABI expects a serious level of concern at the meeting and has predicted that a number of shareholders will vote against the bonuses because they have not been justified by the group’s performance.
In its latest trading update in December, Bellway’s order book stood at £340m – almost half its value 12 months earlier. The builder has delayed the completion of a number of sites because of a fall in demand.
