Persimmon group chief executive Jeff Fairburn has stepped down at the company’s request, following ongoing pressure concerning his remuneration package.
A statement from the FTSE 100 house builder today said that the resignation was “by mutual agreement and at the request of the company”.
Following legal advice, it will also not seek to withhold or reclaim any of the controversial shares awarded to Fairburn under its 2012 long-term incentive plan (LTIP).
In April, several shareholders at the house builder’s annual meeting had decried what they labelled an excessive bonus awarded to the chief executive. Mr Fairburn had initially been entitled to £110m, the first portion of which he collected at the end of last year, but following criticism he offered to give up half of the second portion, reducing the overall amount to £75m.
A vote at that meeting narrowly passed in favour of the remuneration package (51.5 per cent of votes cast), but because around a third of shareholders abstained, only 36 per cent of shareholders actually supported the policy.
In its statement today, the company said that the board believed the “distraction around [Mr Fairburn’s] remuneration from the 2012 LTIP scheme continues to have a negative impact on the reputation of the business and consequently on Jeff’s ability to continue in his role”.
Current group managing director David Jenkinson will be appointed interim group chief executive, effective from 31 December.
Roger Devlin, Persimmon’s chair, 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, the board believes that it is now necessary for there to be a change of leadership.
He added: “David is an experienced operator in the housebuilding sector and has made a significant contribution to Persimmon in a number of senior roles, particularly in land purchasing. I am grateful that he has agreed to take on the role of interim chief executive.”
Mr Fairburn said: “It has been an honour to lead Persimmon through an exciting period of development. I had hoped that revealing my plans to create a charitable trust and to waive a proportion of the award would enable the company to put the issue of the 2012 LTIP behind it. However, this has not been the case and so it is clearly now in the best interests of Persimmon that I should step down. I wish the company the very best for the future.”