From disused rail carriage to City darling - the life of Tony Pidgley

Tony Pidgley's life reads like a feel-good film script. Born to a single mother in Surrey in 1947, he ended up in a Barnardos home and at the age of four was adopted by travellers Bill and Florence Pidgley.

The young Tony spent his childhood living in a disused railway carriage. His adoptive parents made a living by chopping down trees and selling the wood. He left home at the age of 15, barely able to read or write, bought a lorry and went into business for himself.

Now Pidgley looks set to enter the City record books by sharing in one of the biggest- ever boardroom bonanzas – a bonus scheme by housebuilder Berkeley Group that could pay out a mind-boggling £500 million (€705 million) over the next six years.

Pidgley founded Berkeley in the 1970s, taking the company public in 1984. The flotation made him a wealthy man. Berkeley has now grown to become one of Britain’s biggest house builders, constructing one in 10 new homes in London.

Relatively modest

According to the most recent

Sunday Times Rich List

, Pidgley is already worth more than £200 million. And last year he added another £23 million to his fortune as his relatively modest £825,000 salary as Berkeley chairman was boosted by bonuses and share option payouts from long-term incentive plans going back five years.

The chairman was not alone in receiving large rewards. The group’s annual report published on Monday shows that the top five directors on the Berkeley board received bonuses of more than £40 million in all last year, and look set to collect the same this year.

Most of Pidgley’s windfall comes from a scheme set up in the depths of the financial crisis in 2009, when the group’s shares were trading about £8 each. The payouts are based on a share price of £27, although the shares have climbed to more than £35 since then, boosted by support for the housing market from the government’s Help to Buy initiative.

But it’s a scheme set up by Berkeley in 2011, based on £1.7 billion being returned to shareholders by 2021, which could trigger the biggest payouts for Pidgley and his board. They were granted options over some 15 million shares, worth more than £500 million at the current share price. Unless something goes badly wrong over the next five years, which seems unlikely, they will enjoy one of the biggest pay-outs in corporate history.

The group points out that Berkeley’s shares have quadrupled in value since the financial crisis, taking the group’s market capitalisation to almost £5 billion. Pidgley is lauded by the City for his business acumen and for having correctly called the top of the housing market on more than one occasion in recent decades.

But the scale of the rewards seems excessive to say the least. Shareholders are no doubt pleased with the performance of their investment in Berkeley and, of course, they approved the schemes. But as cashing in day draws closer, they may well baulk at the company setting new records for excess with their money.

Co-operative Bank

The utterly incompetent management at the Co-operative Bank in the lead-up to its near-collapse in 2013 has been laid bare once again by the City regulators. An investigation by the

Prudential Regulation Authority

(PRA) and

Financial Conduct Authority

(FCA) has found “serious and wide-ranging failures” in the bank’s controls from mid-July 2009, when it took over the Britannia Building Society, until the end of 2013, when it was bailed out by a consortium of hedge funds after the emergence of a £1.5 billion black hole in its accounts.

Such were the Co-op’s transgressions, it could have been hit with a £120 million fine by the PRA. The FCA could also have imposed a fine. But the regulators say they have decided to spare the group any financial penalty because its financial position remains too weak – it was the only British bank to fail the Bank of England’s stress tests last year.

As well as failures in its control and risk management, the bank showed “a lack of openness” in its dealings with regulators and made “false and misleading” claims about its capital position, the reports said.

The bank may be in too weak a position to face a fine but the regulators made it clear yesterday that they are still investigating the role of “former senior individuals” in the bank’s chaotic decline.

Fiona Walsh is business editor of theguardian.com