Ben Mar­low:

Per­sim­mon’s pig-headed boss has had plenty of chances to do the right thing over the £75m bonus that em­bar­rassed the in­dus­try

The Daily Telegraph - Business - - Front Page - Ben Mar­low

Farewell then to Jeff Fair­burn, the house­build­ing supremo with con­crete ears. Per­sim­mon’s pig-headed boss has fi­nally been ousted af­ter re­fus­ing to cave in to fierce pres­sure over his ob­scene £75m bonus. He won’t be missed. His de­par­ture caps one of the most em­bar­rass­ing episodes in UK cor­po­rate his­tory. Fair­burn should never have been awarded such an out­ra­geous amount.

The de­ci­sion not to cap the bonus scheme was a mon­u­men­tal over­sight from a board that was in a rush to hand out juicy re­wards to its top ex­ec­u­tives for build­ing a few thou­sand houses.

Share­hold­ers too must take their share of the blame for blindly wav­ing through such an ill-con­ceived scheme. With­out a cap, the com­pany was ut­terly pow­er­less to claw back any of the gen­er­ous scheme once it be­came clear that se­nior man­agers were in line for a king’s ran­som.

Still, Fair­burn had a choice. Although it was re­duced from £131m to £75m, he could have handed back the ma­jor­ity, rather than just some of the money, or given it to char­ity. In­stead, he chose to keep it and went into hid­ing, leav­ing chair­man Ni­cholas Wrigley and head of re­mu­ner­a­tion Jonathan Davie to be sac­ri­ficed.

Fair­burn told col­leagues the pay­out had been earned. It’s true that Per­sim­mon has been a re­mark­able suc­cess story, es­tab­lish­ing it­self as a mar­ket leader in af­ford­able homes, with a share price that would be the envy of most bosses.

These points are ir­refutable but he con­ve­niently for­gets one im­por­tant fac­tor: the con­tri­bu­tion of the Gov­ern­ment’s Help to Buy scheme, which has put a rocket un­der prof­its and is re­spon­si­ble for 60pc of Per­sim­mon’s sales.

This was an ex­ec­u­tive team that won the lottery on the back of a share price juiced up by state sub­si­dies. In the same way that chief ex­ec­u­tives are fond of say­ing they can’t con­trol the share price when it goes down, the same ar­gu­ment can be ap­plied when it goes in the op­po­site di­rec­tion.

But Fair­burn ei­ther didn’t un­der­stand the pub­lic mood, or, worse, sim­ply didn’t give a toss. Yes, tech­ni­cally, the bonus was owed but the coun­try is in the throes of a hous­ing cri­sis. Pock­et­ing a whop­ping bonus when many first-time buy­ers can­not get on the hous­ing lad­der, and home­less­ness is spi­ralling, looks both in­sen­si­tive and greedy.

His ar­ro­gance has been deeply dam­ag­ing for the house­build­ing in­dus­try. Ri­vals have been left ex­as­per­ated at a gi­ant po­lit­i­cal own-goal that has handed a gift to a Labour Op­po­si­tion de­ter­mined to erad­i­cate high pay and come down hard on pri­vate house­builders over the short­age of homes.

Fair­burn whined that it was no one’s busi­ness, as if he were em­ployed by a May­fair hedge fund or Wall Street pri­vate eq­uity house. In re­al­ity he ran a large pub­lic com­pany that has ben­e­fited hugely from tax­payer sup­port. Un­for­tu­nately that means hav­ing to an­swer un­com­fort­able ques­tions, par­tic­u­larly when you’re re­fus­ing to part with such an ob­scene sum.

Fair­burn wasn’t even up to that. The one time he was quizzed was a to­tal dis­as­ter. An on­line clip of the car-crash in­ter­view with a BBC re­porter was watched more than a mil­lion times, prov­ing be­yond any doubt that the pub­lic wanted proper an­swers.

The in­ci­dent proved to be Fair­burn’s un­do­ing. New chair­man Roger Devlin had come in with an open mind but it was clear to even a dis­in­ter­ested by­stander that Per­sim­mon’s rep­u­ta­tion was in shreds, and the loss of cus­tomers was a very real risk. Morale was start­ing to suf­fer too.

Fair­burn was even al­lowed one fi­nal shot at redemp­tion by for­go­ing some of the re­main­der of the bonus – roughly £50m – that he still stands to col­lect, an of­fer that was en­tirely un­de­served. He de­clined. Faced with such in­tran­si­gence, Devlin had lit­tle choice.

Although the com­pany is pow­er­less to claw back any more of Fair­burn’s bonus, it has man­aged to wrig­gle out of a pay-off – a small con­so­la­tion at least.

It is al­most cer­tain that Fair­burn won’t get an­other job at a pub­lic com­pany but then he won’t need one. Aged 52, a gilded re­tire­ment awaits. Still, he leaves a le­gacy of sorts: the end of un­capped bonus schemes. No board worth its salt will make such a colos­sal mis­take again.

‘His ar­ro­gance has been deeply dam­ag­ing for the in­dus­try’

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