Heads the CEO wins, tails it's not his fault it's all down to the market, can't you see that?
Foxtons used to delight in being one of Britain’s brashest, most annoying companies. Its bright green minis emblazoned with its yellow logo swarmed around London and the shares soared on the thermal updraft from the capital’s smoking hot property market.
Until, that is, winter came, ushered in by Brexit, stamp duty changes and other unwelcome developments.
As a result, last year’s profits tumbled by nearly two thirds. So did shareholders' dividends, and it can’t have been much fun working there.
- Foxtons’ profit slumps as London market lingers ‘near historic lows'
- Foxtons profits plummet 64% amid 'unprecedented' uncertainty
- Foxtons estate agents sees revenues slump by 25%
This year isn’t likely to be much better. The sharp suited young men and women flogging property from its offices will have to update their wardrobes via the sale rails, or make use of their local dry cleaners to continue looking chipper.
Not so CEO Nic Budden, however. He’ll still able to patronise Saville Row. Somehow, someway, he raked in a £218,000 bonus despite the business's dismal performance.
Apparently this was for executing “personal and strategic objectives”.
I wonder how a Foxtons agent would feel about reading that after being hauled over the coals by their manager for failing to sell enough houses.
I wonder how managers would react to an agent saying: “But I smiled nicely, got my hair cut and ordered all my files. Don’t I get credit for achieving these personal and strategic objectives?”
It's not completely bonkers to link bosses' rewards to categories like this. You want CEOs to think strategically and act in the long term interests of the businesses they run rather than burning things up to keep the quarterly trading statements looking pretty.
Still, when a business hits both its shareholders and staff where it hurts the least you might expect is a bit of personal parsimony from its leader.
You might expect along the lines of: “Having taken everything into consideration I feel it incumbent upon me to waive the bonus the remuneration committee has elected to pay me this year.”
It’s not as if Mr Budden is exactly going hungry. He gets a basic salary of £550,000. It has been flat since 2015 but in that year, itself hardly stellar, it was hiked by nearly a fifth because we were told he had been underpaid (no, really) in the past. He also saw his maximum bonus increased to 125 per cent of that sum.
That might have been forgotten about had he proved himself to be a corporate superman and taken Foxtons to the stars, but he hasn’t done that, as the company’s recent progress has made clear.
Sheena Mackay, the latest remuneration committee chair, bemoaned the condition of “the London sales market” and “the wider macro-political uncertainty affecting the London property market” in her letter to shareholders ahead of the section of the annual report devoted to executive pay.
Business news: in pictures
Business news: in pictures
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In other words: it’s not Mr Budden’s fault. He’s a super chap!
If the market turns around, and Foxtons jumps up, however, you can bet she’ll be singing a different tune. Then it will all be down to him and Ms Mackay will be piously justifying the mega bonuses that prompted a shareholder revolt last year (it got the group a place on the government’s corporate naughty step).
Heads the CEO wins. Tails, well, it’s not his fault, it’s the market.