Foxtons Under Fire For Use of Taxpayer Funds
Paying big bonuses and making acquisitions while claiming cash from government
Foxton's HQ in Chiswick Business Park
Shareholder groups and an MP have condemned Chiswick-based estate agency Foxtons after it was revealed its CEO is set for a large bonus while the firm is making losses and claiming funds from the government.
The company’s renumeration report due to be presented to shareholders is recommending a short term bonus of £389,000 for Nic Budden bringing his total pay packages of £1.6mn compared to £1.25 million the year before according to a report by the BBC. This year’s deal also awards him shares worth over half a million which he can cash out in five years’ time.
Shareholder advisory firm ISS has condemned the award and recommended shareholders vote against the report at the AGM due to take place on 22 April. It says, "There is a material disconnect between bonus outcomes and company performance for the year under review."
Foxtons has received £4.4 million in furlough payments as well as £2.5 million in business rates relief bringing the total effect taxpayer funding of the company to over £7million over the course of the year.
Darren Jones MP for Bristol North West, chair of the Business Energy and Industrial Strategy Committee, said in an interview with Yahoo Finance, “As the business committee has said time and time again, business leaders need to act in good faith when using taxpayers' money during the pandemic.
"We have called out businesses who have passed on taxpayers' money to shareholders, instead of using it to keep workers in their jobs or returning it to the Treasury if it’s no longer required."
In addition the firm undertook an emergency capital fundraising during the year bringing in £21million but diluting the interests of existing shareholders.
ISS added, "Some investors may question the appropriateness of awarding bonus payments to the executive directors before paying back the government support received."
The Investment Association, which represents 250 fund management firms has issued a ‘red alert’ about Foxtons' on its Institutional Voting Information Service (AVIS) and the Financial Times is reporting that, Glass Lewis, a shareholder advisory firm has criticised the bonus payment and recommended that investors vote against it. It said, "In our view, there is no reason as to why the company should not reduce the bonus to nil, a common practice among FTSE listed peers."
Foxtons has defended its actions saying, "We believe it's right to reward hard work and results in a year when the business did well in very tough circumstances" and added that a separate cash bonus awarded to Mr Budden's has more than halved while his overall cash compensation was down "more than a quarter compared to the year before".
A spokesman for Foxtons told the BBC, "Like many businesses, Foxtons was forced to close for months over the past year. We were very grateful for government support which we used for as short a period as possible but entirely as it was intended - to keep people in jobs during a lengthy closure."
"We did trade for a large part of the year, having stopped using the furlough scheme, and worked hard to support home moves and keep our tenants' properties safe and secure."
During the pandemic Foxtons has been acquiring other estate agents recently paying £14million for London agency Douglas & Gordon after buying Aston Road for £2.2million last November.
Last year, Foxtons reported a 12% drop in revenue to £93.5m but pre-tax losses narrowed from £8.8million to £1.4million.
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April 15, 2021