Until this year, Nic Budden had the distinction of never having received anything from his long-term share awards since becoming the chief executive of Foxtons (FOXT). Since taking the reins in July 2014, his performance tests have failed to trigger any allocation of shares.
Foxtons “has been significantly influenced by the prolonged sector downturn over the last 6 years which is due to external factors largely outside of management’s control”, according to its directors, which sits oddly with the better performance by its competitors in sales, lettings and mortgage broking. And “this does not reflect the strong performance and success of the CEO in maintaining the Company in a strong position throughout the downturn and progress with the Group’s strategy.” Five-star ratings on Trustpilot from customers appear to support this, but they conflict with reports elsewhere of aggressive sales practices, rudeness and lack of communication by its workforce.
“A weakness of the current remuneration policy was the difficulty in accurately setting meaningful long-term targets due to significant uncertainty and cyclicality challenges in the external environment in which Foxtons operates,” Alan Giles, who chairs the remuneration committee, wrote in the 2019 annual report. This “makes the timing of such awards more relevant than the actual performance of the Company and in practice does not encourage a longer-term focus for the Executive Directors because of the challenge of setting realistic targets three years in advance.”