House falls in on Fairburn

JeFF Fairburn deserves some credit for stoicism. Amid a torrent of criticisms, high level departures from the board and barely suppressed anger from shareholders, he has shown determination to hang on to a bonus package that keeps on giving.

But the lottery-winning Persimmon boss, Britain’s £131m man, should by now have seen the writing on the wall.

Instead of being viewed as a hero for quietly building the houses Britain needs, he is on his way to becoming a national pariah, bringing disgrace to the company he heads and the whole industry.

Indeed, in spite of all his fighting talk about demand and supply and building for Britain, his claims for Persimmon do not wholly stand up to scrutiny.

even with the enormous subsidy that housebuilders have had from help To Buy in the past year, York-based Persimmon still failed to overhaul the record numbers of houses it built in 2006, before the financial crisis, when there was no such scheme.

So what happens now? Slowly but surely big battalion investors have recognised that Fairburn’s greedy payout is not just a problem for Persimmon but for their own reputations as guardians of governance. Axa wisely voted against the deal in the first instance. others that backed it at the time appear to have reservations and are putting pressure on the board with a view to finding a route out of the mess. The legal niceties are complex, but it is in the interests of no one that the bonus package for Fairburn and other Persimmon top brass turns the company into a corporate pariah.

At its core, Persimmon is there for all stakeholders, and Fairburn cannot hold the housebuilder hostage.

Black Hawk up

There is something delightfully nostalgic about the Melrose bid for GKN. The late Lord hanson, who helped nurture the skills of Melrose chairman Christopher Miller, would think the boy has done good.

using old fashioned analytical tools he and his team spotted a mispriced stock needing some care and attention, offered a 24pc premium (involving a lot of paper) and the shares have shot up.

Never mind that the £7bn price tag for the engineer takes it way beyond any deal Melrose has done before.

In Mike Turner, former chief executive of BAe and also chairman of Babcock, Melrose is challenging engineering royalty.

This is similar to the way that hanson took on chemical royalty when it sought to buy ICI in the 1990s.

The GKN response looks to be appropriate. It has gifted the FTSe100 its eighth woman chief executive in the shape of Anne Stevens, veteran of Ford and former director at Lockheed Martin.

She has spent months doing an audit of GKN plants in search of efficiency savings and cash generation.

The other response is to do the splits. A quick look at GKN turnover shows that with 37pc of it from aerospace and 45pc from car parts there is a natural separation. Such a move is understood to have support from Vulcan Value Partners – one of the largest shareholders.

But it will not be easy, given the uK pension deficit estimated at £1.1bn and tax complications.

GKN is one of Britain’s best-performing engineers and exporters over a long period. It has been knocked back by accounting trouble at its Alabama plant in the uS, which makes parts for the Black hawk helicopter, that will wipe as much as £130m of profit largely as a result of failing to thoroughly account for inventories.

It joins a select list of British companies, including aerospace group Cobham, Centrica and of course BP, that have found that doing business in the uS is not always a bed of roses. As much as one admires the way that Melrose delivers for investors, GKN has earned the chance to recharge batteries and get its mojo back.

Super iShares

blackrock owes a huge thank you to the late Patti Dunn (founder of Barclays Global Investors), Bob Diamond and former Barclays chief executive John Varley.

In the panic to keep Barclays out of the hands of the Government in 2009, Barclays sold BGI, inventor of the iShare – pioneer of exchange traded funds (eTFs) – to Blackrock for just £8.2bn.

In the final quarter of 2017, Blackrock inflows were £76.3bn, fuelled by eTFs as the Dow soared. Wow.