Self-harm at Persimmon
BY RIGHTS, we should be applauding Persimmon as it joins the garlanded club of FTSE 100 firms earning £1bn a year, and makes extravagant pledges to turn over a new leaf.
But although chairman Roger Devlin did a fine job in getting £75m man Jeff Fairburn to walk the plank, he has failed to lift the stain of greed at the taxpayer’s expense.
After conducting an amazing and farreaching outside search for a successor, hey presto the board has come up with the perfect choice. There he was bestriding the world of building like a colossus, the interim chief executive and Fairburn’s right-hand person – Dave Jenkinson, the £40m man.
And shouldn’t investors, the taxpayer which funds the Help to Buy scheme, the home buyers in houses which are falling down around them, all be truly grateful?
Jenkinson is making the supreme sacrifice of sticking with his old salary of just £515,000 before any gains he may draw from a future incentive plan.
Given that, between them, Fairburn and Jenkinson have collected £115m from the company, one would hope that by now there would not be a homeless person in York or for that matter the whole country. Every waif and stray should at the very least be staying in comfortable shelters paid for by charitable trusts still shrouded in mystery.
All we know is that Jenkinson in his munificence chose to buy the Shambles pub in Morpeth, Northumberland. Hopefully, it will be free beer for all those Persimmon employees earning the living wage, homeowners wondering why walls are crooked and investors querying how a company so easily allowed its reputation to be trashed.
The Help to Buy scheme assisted in delivering record numbers of new homes. Some 81pc are first-time buyers, the group the scheme is intended to prop up.
There is some evidence that, with house prices rising, the plan has delivered a remarkable £1bn surplus for the taxpayer. But it is also worth noting that house prices sometimes go down as well as up and that could be a problem.
What is offensive is that money has gone to households which are rich, earning more than £100,000 a year.
Too many properties are shoddy and misleadingly sold on leasehold.
In broking houses they may shout from the rooftops that Persimmon has done a terrific job in strengthening margins. There is another phrase for that: excess profits.
Rose-tinted
CONNECTIONS are important in dealmaking. The doomed-looking merger of Sainsbury’s and Asda was dreamt up by two ex-colleagues: Sainsbury’s Mike Coupe and David Cheesewright of Walmart.
The proposed joint venture between Marks & Spencer and Ocado is product of one chairman, Archie Norman, reaching out to former M&S boss, Ocado chairman Sir Stuart Rose. M&S has been struggling with the idea of online fresh food deliveries for years but couldn’t make it work.
The economics are tricky. It takes a food basket of £100 to make online deliveries pay and most M&S shoppers never reach that.
Tesco, which claims a big online operation, found it couldn’t make it pay operating out of dark warehouses. It has reverted to filling baskets in store. So for an M&S basket to work it may have to be shared with Morrisons or someone else.
Providing Ocado finds a way of fireproofing its warehouses it may be able to shed the grocer brand. The ambition is to be the Amazon of fresh foods, using its software, robotics and logistics across the globe.
Norman is buying into reliability and trusting Rose to help come up with a solution. Will this solve M&S’s food struggle? Probably not.
But it is better than engaging in endless, expensive and wasted trials.
Drug heist
REMEMBER Amersham? The researchbased pharma group was an early successes of Mrs Thatcher’s privatisation soaring into the FTSE 100 before being bought by America’s General Electric in 2004.
There was a pledge that boss Sir William Castell would run the US group’s healthcare operations from Amersham.
Castell moved on to the Wellcome Trust, HQ headed to somewhere in Illinois and now life sciences, including much of Amersham, is being sold to US group Danaher for £16bn to plug a hole in GE’s balance sheet. Ownership and command and control matters.