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Paul Williamson is from Deloitte »THERE will be plenty of red faces at Newcastle housebuilder Bellway today after the decision by the Association of British Insurers to issue its most serious warning to the company amid concern over the size of the bonuses being paid to its directors.
The firm's renumeration committee - chaired by former Northern Rock chairman Leo Finn - has rewritten its rules on bonus payments in order to award the group's top three directors some £632,500 in annual bonuses - 55% of their combined annual salaries.
The ABI, which represents major investors, has objected to this decision in light of the firm's financial performance which saw profits plunge 30%, according to last month's trading update. It has issued its strongest "red-top" warning to the housebuilder.
And you can imagine that the shareholders won't be the only ones who think it's a little inappropriate for the firm's directors to reward themselves in this way.
After all, Bellway axed 850 of its 2,500 UK staff last year as it reacted to the downturn in the housing market.
I imagine some of them will be smarting at the move by the company's top brass to reward themselves for their own "very good performance in challenging conditions" (the words of the firm's own annual report).
The annual general meeting at Newcastle's Copthorne Hotel next Friday - at which Mr Finn is due to stand down from his role with the company - could be interesting...
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