The former chief executive of Bovis Homes has been handed more than £500,000 in salary, bonus and benefits as part of his payoff.
David Ritchie stepped down from the troubled housebuilder’s board in January, a fortnight after a profit warning and before the company had set aside £7 million in February to redress complaints.
He will be paid a lump sum of £242,180 and will receive a total of £338,250 from July until December in lieu of notice. His contractual notice period runs until January.
Mr Ritchie, who formally left Bovis on February 28, will receive a £55,000 bonus next month as part of last year’s scheme “which may be subject to clawback for a period of two years”. He will continue to receive benefits and Bovis will make contributions to his legal costs and “outplacement counselling”.
Mr Ritchie, who was appointed chief executive in July 2008, is also in line to reap about £476,000, based on Bovis’s share price, from a long-term incentive plan that vested a year ago.
Tens of thousands of shares granted under more recent awards, including up to 50,598 shares that became exercisable last month, are subject to performance conditions being met. The details of Mr Ritchie’s payoff were disclosed on Bovis’s corporate website.
Shares in Bovis fell sharply last month when the company, led by Earl Sibley, the finance director and interim chief executive, said that it would build fewer homes and make less profit this year after it acknowledged weaknesses in its production process. The Times had reported six weeks earlier that Bovis had offered cash payments to customers to encourage them to move into homes despite buyers’ concerns they were not finished.
The problems at Bovis have encouraged Galliford Try and Redrow, its listed rivals, to launch approaches for the company. Bovis has rejected Redrow’s 814p cash-and-shares proposal, including dividends, and Galliford’s 886p all-share pitch, but it remains in talks with the latter.
Investors will be given a vote on Bovis’s remuneration report at its annual meeting in May but the payoff formed part of the company’s policy approved by shareholders in 2014.
Shares in Bovis fell 1½p to 907½p.
The terms of David Ritchie’s exit were published under the heading “section 430 statement” on Bovis’s corporate governance webpage (Alex Ralph writes). Although the disclosure was within the requirements of the Companies Act 2006, in the past some companies have opted to reveal such details in stock market announcements.
Oliver Parry, at the Institute of Directors, said: “Investors deserve to understand what senior executives are being paid at the point of stepping down.” A spokesman for Bovis said that the company had made a “prompt and full disclosure”.