Finance director apologises for ‘not communicating’ and says housebuilder has set up new bonus structure

Bellway bosses have confirmed they will not repay their 2008 performance bonuses, following talks with shareholders.

The decision marks the end of a row that erupted earlier this year when the Association of British Insurers (ABI) wrote to the housebuilder’s biggest shareholders claiming it had breached good practice by awarding bonuses despite missing targets.

The payments to three directors, including chief executive John Watson, totalled £632,500 and were voted down by shareholders at Bellway’s annual general meeting in January.

Bellway said it would review its bonus policy in consultation with shareholders amid calls for the sums to be repayed.

Alistair Leitch, finance director, said: “The chairman of the remuneration committee held very positive meetings with our shareholders and we realised there was a problem on our side in not communicating what we’d done, which we apologised for.”

The talks also saw the setting up of a new bonus structure. Leitch said: “Things will be different in future. The targets are harder to hit and don’t just look at earnings.” He refused to reveal details but the new bonuses are thought to be more closely aligned to profit and cashflow figures.

He added: “Our payments were paltry compared to some of these bankers who have gone cap in hand to the government.”

The ABI declined to comment but sources suggested the fact that Leo Finn finished his term as chairman of the remuneration committee in January had helped smooth the waters.

Leitch spoke after the company announced its results for the six months to 31 January 2009. He described the results as a “creditable performance” given the backdrop of the past 12 months and said the first 11 weeks of 2009 had shown some positive signs.