Berkeley share price: Group faces shareholder revolt

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Sep 2, 2019
Updated: Sep 16, 2019

Berkeley Group (LON:BKG) is facing opposition to its new pay policy, with an investor advisory firm urging shareholders to vote down the housebuilder’s new bonus structure, City A.M. reports. The news comes ahead of the FTSE100 company’s annual general meeting (AGM) on Friday.

Berkeley’s share price has climbed marginally higher in London this morning, having gained 0.23 percent to 3,926.00p as of 10:50 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.03 percent higher at 7,281.38 points. The group’s shares have added just under eight percent to their value over the past year, as compared with about a two-percent fall in the Footsie.

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Berkeley faces shareholder revolt

City A.M. reported yesterday that Institutional Shareholder Services (ISS) had opposed Berkeley’s payment policy, arguing that the group’s proposals to axe its bonus were “unlikely to affect the remuneration received by executives going forward”. The proposed changes include extending the long-term incentive plan (LTIP) for a further two years and the removal of LTIP caps while maintaining a baseline dividend payout. Shares earned but not vested by 2021 will have to be re-earned by management over a four-year period.

“This fails to encourage an enhanced level of company performance, with awards vesting simply for maintaining the established returns policy and invites criticism that there is significant scope for improved alignment between performance and payout,” the advisory group said in a note, as quoted by the newswire.

City A.M. also quoted a spokesman for Berkeley as commenting that major shareholders consulted by the company had “provided a positive response to the proposed changes”.

Analysts on blue-chip housebuilder

UBS reaffirmed the FTSE 100 company as a ‘buy’ last week, without specifying a target on the Berkeley share price, while Peel Hunt, which rates the company as an ‘add,’ lifted its valuation on the shares from 3,790p to 4,020p.

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