Danny McCance 7 Nov 2018 04:43pm

Persimmon CEO leaves over pay controversy

Jeff Fairburn agreed to step down as group CEO at the request of the housebuilding company due to the “distraction” caused by his £75m remuneration packet

The board of Persimmon said the backlash over his bonus pay out, which was reportedly reduced from £100m, “continues to have a negative impact on the reputation of the business” and on Fairburn’s “ability to continue in his role”.

He became the UK’s highest paid CEO in 2017 after receiving £47.1m.

Persimmon chairman Roger Devlin thanked Fairburn for his contribution over 29 years with the company, but said that “the board believes it is now necessary for there to be a change of leadership”. 

Under Fairburn’s control, Persimmon more than doubled in size to a market capitalisation of £7.5bn, selling more than 74,000 homes across the UK.

In February, Fairburn, alongside CFO Mike Killoran and group managing director Dave Jenksinson, agreed to reduce their bonus entitlements from the controversial Long Term Incentive Plan (LTIP) following shareholder dissent.

There was further controversy in April when almost half of shareholders (48.5%) still voted against the annual report on remuneration.

Fairburn agreed to a shortened notice period and will be replaced by Jenkinson, who will serve as interim CEO .

Persimmon said that it had no right to withhold or seek forfeiture over Fairburn’s pay awards as he is leaving at the company’s request, but he will receive no further payment upon leaving on 31 December.

The board had previously said that although the LTIP – approved in 2012 – has been a significant factor in the company’s recent success the the absence of a cap contributed to significantly larger payouts than “might reasonably have been expected at the time the scheme was originally put to shareholders”.

In December 2017, the company chairman and Remuneration Committee chairman, resigned because they did not put a cap on the LTIP.