Britain’s top property bosses took a collective pay cut of more than £16m last year, after sector-wide pandemic struggles caused bonuses to be slashed and long-term incentive plans to be shelved.
According to EG’s analysis of 28 of the UK’s largest listed real estate companies, property chief executives took home £41.9m in their business’s 2020 financial year, down from £58.2m in 2019.
That included a £1.4m drop in take-home pay to £892,000 for Unite Group boss Richard Smith, who took a temporary salary reduction, waived his annual bonus and took a more than two-thirds cut in long-term incentive payouts after a difficult year’s trading for the student housing provider.
Capital & Counties boss Ian Hawksworth took home £753,000 less in 2020 than the previous year, and Shaftesbury chief Brian Bickell received £485,000 less, after the impact of lockdown meant that neither landlord met the criteria to hand out annual bonuses or long-term incentive plan payouts.
Hawksworth received £813,000, while Bickell earned £616,000, after also taking a voluntary 20% cut to his base salary for three months last year, which went into Shaftesbury’s community fund.
Across the board
The figures mean that 2020 was the second consecutive year in which the sector’s top earners took a significant collective pay cut. The previous year, that was largely driven by reductions in pay to the bosses of companies such as Persimmon, Sirius Real Estate and St Modwen. However, this time around it was spread more evenly, and was mainly down to reductions in bonus payouts after a year of falling portfolio values and reduced rent collection, particularly across the retail and office sectors.
Of the 28 companies analysed by EG, 18 reduced their chief executive’s annual bonus, 14 more than halved it and 11 cut it entirely. Bonus payouts collectively fell to £7.1m from £13.4m the year before, equating to an average payout of £252,000, compared with £481,000 in 2019.
Payouts via companies’ long-term incentive plans also collectively fell by more than £9m to £16.1m. The average long-term incentive plan payout this year was £576,000, down from £903,000 the previous year.
Few companies gave their chief executives significant increases in take-home pay, but Landsec was one of them. New boss Mark Allan, who joined in April last year, received £2.9m overall.
However, £1.7m of that was through buyout awards that the company handed him on arrival. Allan’s take-home fixed pay excluding this figure was just over £1m, down on the £1.6m handed to former boss Robert Noel the previous year.
Voluntary pay cuts
SEGRO’s David Sleath received £2.9m less in 2020 than the previous year, which was mainly down to 2019’s bumper £4.7m long-term incentive plan share payout covering payments from both 2016 and 2017 after a shortening of the plan’s performance measurement period. Sleath’s payout under the plan for 2020 was equivalent to £1.9m, and related to his 2018 award.
Sleath also took a voluntary 25% reduction in his base salary for three months of 2020, which went towards SEGRO’s £10m community fund, bringing his total base wage to £663,000 for the year.
Other bosses who took voluntary pay cuts include Andrew Jones of LondonMetric, who temporarily waived 20% of his earnings to donate to charities.
British Land directors channelled the proceeds of 20% salary cuts between April and June 2020 to the company’s community investment fund, and Capital & Regional used a 20% reduction in salary and fees for directors to support employees financially hit by Covid-19.
Housebuilders take a hit
Despite earning notoriously generous pay packets historically, housebuilder chief executives suffered some of the biggest cuts to their overall remuneration of the entire property sector, after construction shutdowns in the early months of the pandemic severely hit financials across the industry.
Barratt boss David Thomas earned £2.5m less than last year, taking home just over £1.2m. As well as a temporary 20% reduction in base salary during the first Covid-19 lockdown, his annual bonus was cut to nil and long-term incentive plan payouts reduced by four-fifths. All three measures applied to Barratt’s entire executive leadership team.
Taylor Wimpey chief executive Peter Redfern’s take-home pay was slashed by £2.1m to £1.1m. Similar to Barratt, Taylor Wimpey’s executives took a voluntary 30% base salary reduction during the first lockdown, had bonuses cancelled and received only 6.6% of long-term incentive plan payouts.
The highest-paid chief executive in the sector – by some distance – was Berkeley boss Rob Perrins who took home £8m, a slight pay rise on the £7.8m package he received last year.
However, even Perrins did not get an annual bonus this year, whereas in 2019 he received £1.6m. The gains in his remuneration were almost entirely the result of a lift in shares via his long-term incentive plan.
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