Bellway directors ‘scapegoated’ by watchdog

The dispute broke out last week after the Association of British Insurers (ABI) sent a letter to the housebuilder’s 20 biggest shareholders drawing their attention to what it said were breaches of good practice.

The allegations centred on performance bonuses totalling £632,500 that were awarded to three board members, including John Watson, the chief executive (pictured). The bonuses were paid despite the company posting a 30% fall in profits in 2008.

The ABI monitors 700 companies and issues similar warnings in about 2-3% of cases.

The company declined to comment on the row but a source close to the situation said: “There is a feeling that the bosses are being used as scapegoats to warn December-year-end companies off doing the same thing. By raising the issue, the ABI is sending out a warning not just to housebuilders but to the whole of industry.”

Peter Montagnon, head of investment affairs at ABI, denied that Bellway had been singled out. He said the complaint centred on the fact that the firm abandoned the targets that would have triggered bonus payments but awarded bonuses anyway.

It abandoned its targets, which undermines discipline of linking pay to performance

Peter Montagnon, ABI

He said: “They are not being used as scapegoats. Bellway abandoned its targets, which undermines the discipline of linking performance to pay so we would always have issued a warning in such circumstances.”

A vote to approve the bonuses now faces defeat at the company’s annual meeting on 16 January.

Montagnon would not be drawn on whether there was enough opposition to defeat the motion but described the shareholders opposed to the move as “quite a significant group”.

The source close to Bellway said: “The company doesn’t know what will happen but you can bet shareholders won’t vote down their dividend, which, like the bonuses, is 55% of the possible maximum.”