Conygar Investments Shareholder Poll
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Discussion1 on Motley Fool BB Discussion2 on Motley Fool Conygar Investor relations Conygar Annual Report 2011
In addition, the increase in adjusted net asset value per share must exceed a hurdle of 6% compounded annually since the last high watermark (134.8p at 30 September 2009). Executive directors are required to invest a minimum of 50% of any profit share payment in shares of the company which must be held for a minimum of two years except subject to certain good leaver provisions.
The remuneration committee has absolute discretion over participation, pool allocation and determination of performance conditions save in a limited number of circumstances covering change in control and certain good leaver provisions."
Annual Report 2011, page 17
Comment: The average rental yield on Conygar's property is about 9%, so even if inflation plus the actions of directors did not add any nominal value to the properties, over time the NAV hurdle will be regularly hit. The directors then get a bonus of 20% of the adjusted NAV increase from the previous high watermark. This increase is calculated without any 6% PA rise or inflation adjustment.
For example: Year1 adjusted NAV £100m. Year2 adjusted NAV £105m. Year3 adjusted NAV £115m.
Supposing that NAV/share tracks adjusted NAV, there would be no bonus in Year2. In Year3 the hurdle is hit. The adjusted NAV has risen £10m (less than a years' rental and inflation) yet the bonus pool would be £2m.
FY NAV NAV/share Profit share Basic salary Share-based Total board Pretax Tax Profit before TBC as % of profit TBC as
charges costs (TBC)* profit paid** TBC before TBC % of NAV
2007 £65m 162p £1.2m £0.5m nil £1.7m £8.2m £2.55m £9.9m 17% 2.6%
2008 £68m 164p £1m £0.2m £1.1m £2.3m -£0.1m £0.26m £2.2m 104% 3.4%
2009 £162m 140p £4.7m £0.8m £1m £6.5m £13.7m -£0.35m £20.2m 32% 4.0%
2010 £177m 150p nil £0.9m £0.4m £1.3m £14.9m £0.64m £16.2m 8% 0.7%
2011 £158m 155p £2.7m £0.8m nil £3.6m £1.8m £0.68m £5.4m 67% 2.3%
* excluding pension costs ** note that Tax paid is very far from the normal rate of corporation tax in years 2008 to 2010
Comparison with Land Securities
Executive directors total remuneration in 2011 was £3.75m (£1.86m basic, £1.9m in benefits & bonuses). The eight non-execs were paid £0.74m.
Share-based charges were £3.8m giving total board costs (ex-pension) of £8.3m. This was 0.13% of NAV (£6367m).
NAV/sh rose 18%, and 19.5% on an adjusted & diluted basis.
If Land Securities had the same profit share scheme as Conygar, the directors would share a £225m pot.