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The boss of the country’s second largest house builder, who was controversially awarded a giant bonus package, is to step down after its board decided publicity around his pay was having a negative impact on the business.
Persimmon confirmed to the stock exchange this morning that Jeff Fairburn, its chief executive, would leave by “mutual consent” at the end of the year, with Mr Fairburn’s pay given as the reason for the decision.
The house builder said that Mr Fairburn’s pay had become a “distraction”, and was having a “negative impact on the reputation of the business” and on his ability to continue in his role.
The decision comes after a major storm around Persimmon’s 2012 long-term incentive plan, which saw Mr Fairburn originally in line for a bonus payout of £110m.
Despite initially defending the bonus, Mr Fairburn saw it cut by around £30m in February.
Under the settlement agreement, Mr Fairburn has had his 12-month notice period cut short and will not receive a bonus for 2018.
However, the chief executive will hold onto shares he was allocated when he leaves and will be able to sell these after 6 July 2021.
Mr Fairburn, who has been chief executive since 2013, will leave the company on 31 December with David Jenkinson, group managing at Persimmon, to takeover the role on an interim basis.
Roger Devlin, chair at Persimmon, said: “Under Jeff’s leadership Persimmon has sold more than 74,000 homes across the UK while more than doubling in size, increasing its market capitalisation from £3.4bn to £7.5bn, returning over £2.2bn to shareholders and producing industry leading margins and returns on capital.
“However, given the continuing distraction around the scale of his remuneration resulting from the 2012 LTIP [long-term incentive plan], the board believes that it is now necessary for there to be to be a change of leadership. On behalf of the board I would like to thank Jeff for his significant contribution to the business over a 29-year period.”