Estate agent Foxtons under fire over chief executive’s bonus

Foxtons is facing criticism from investors and shareholder groups over its decision to award its chief executive almost £1m in bonuses for a year in which it took government support and raised cash to see it through the pandemic.

Asset managers and two of the world’s largest advisers to shareholders — Institutional Shareholder Services and Glass Lewis — have condemned the estate agent’s plan to pay Nicholas Budden a short-term bonus of £389,300. The chief executive was also given £569,000 in shares under a longer-term bonus scheme.

Their concern is that Foxtons is paying out bonuses to executives despite a sharp fall in its share price — from 94p before the pandemic to about 66p now — and after it benefited from almost £7m of government Covid support. The agent furloughed the majority of its staff for several months last year and used schemes including business rates relief. It turned to shareholders to raise emergency cash last April to shore up its balance sheet. 

Glass Lewis said that “given the shareholder and wider workforce experience over the period”, it had concerns about any payouts. “In our view, there is no reason as to why the company could not reduce the bonus to nil, a common practice among [its] FTSE listed peers.”

ISS argued there was a “material disconnect between bonus outcomes and company performance for the year”. 

“Some investors may question the appropriateness of awarding bonus payments to the executive directors before paying back the government support received,” it added.

ISS and Glass Lewis have recommended that shareholders vote against Foxtons’ pay plan at its annual meeting on April 22. Pirc, another proxy adviser, suggested shareholders abstain, while the Investment Association’s Ivis service is understood to have issued a “red top” for pay at the agent, its highest level of warning. 

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Big investors have in recent weeks called on companies to ensure executive bonuses are reflective of the experience of wider stakeholders. 

One large UK investor said Foxtons was “basically doing the complete opposite of what we would expect them to do”. Another top 20 shareholder said they had yet to decide how to vote, but were concerned and looking closely at the pay package.

Budden’s salary, pension contribution and annual bonus fell in 2020 but his total remuneration rose to £1.6m, from £1.26m in 2019, because of a newly introduced share plan. Shares awarded under that plan do not vest for three years and cannot be sold until a further two years have passed.

Foxtons said: “Our executive directors’ bonuses were cut by half compared to their entitlement and the CEO’s overall cash compensation was down more than a quarter compared to the year before.

“The vast majority of reward in the property sector is dependent on performance, and we believe it’s right to reward hard work and results in a year when the business did well in very tough circumstances. Our aim has been to strike the right balance in recognising the situation while also acting in the best long-term interests of all our stakeholders.”

Foxtons has declined to pay back £4.4m it received through the furlough scheme, despite peers in the sector doing so. Winkworth, another London-focused estate agent, paid back its furlough cash after a stronger-than-expected rebound in property sales.

Foxtons said in December that it would buy back up to £3m of its shares, after a surge in property sales in the wake of the government’s stamp duty holiday.

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ISS said Foxtons’ move to cut the maximum bonus entitlement for executives did not go far enough.

The group also flagged concerns about the newly introduced share plan, warning of “potential windfall gains” if Foxtons’ share price rallied significantly.



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