Jeff Fairburn’s gargantuan bonus is the house building story that just won’t go away. In light of the outcry at the £100m plus he was slated to receive Persimmon’s Fairburn agreed to reduce it to £75m and make a sizable donation to charity.
For many this wasn’t anywhere near enough. At the recent Persimmon AGM, 48% of shareholders voted against the payout and 30% abstained. Euan Stirling of Aberdeen Investments, a 2.3% shareholder in Persimmon said the reduction “did not even get close to acceptable”
ShareAction, a pressure group committed to responsible investment and greater financial transparency attended the Persimmon AGM to petition Fairburn and point out that his bonus would pay 4,100 people the Living Wage outside of London. An inequality they described as “indefensible”.
So where do Fairburn and Persimmon go from here? What figure would be widely accepted by investors, politicians and the wider public? It’s hard to imagine that number would be any more than a small fraction of £75m which would mean Persimmon effectively tearing up their LTIP scheme in operation for the past five years. And whilst Fairburn gets all the headlines, several hundred senior directors in Persimmon have benefitted hugely from this scheme. If Fairburn is taking a hit should they be too? It all sounds rather messy.
The NHBC has published figures showing that new homes registrations have declined by 2% for the 2017/18 year. This was largely influenced by Beast from the East which halted production on many sites for up to a month.
Regardless of the exceptional weather the total new build figure even including conversions barely tops 200,000 against a government target of 300,000 per annum.
Steve Wood, CEO of the NHBC, points out that the UK needs 25,000 more bricklayers if the industry is to achieve the government target – an unlikely event. Instead, he suggests a quicker adoption of modular housing built offsite is more likely to create the required surge in new build numbers.
Clearly eager to finish with an air of positivity Wood concluded that “Business confidence in both the private and affordable sectors remains high with clear routes to continued growth in 2018, and NHBC will continue to help support house builders to build the high-quality new homes that people across the UK need”
According to The Independent, Bovis Homes have not completely cleaned the house (excuse the pun) in terms of customer service issues that dethroned former CEO Dave Ritchie 16 months ago.
In early 2017 it became public knowledge that Bovis had offered cash payments to customers to move into unfinished houses in a bid to meet an ambitious annual completions target.
The fall out in terms of customer complaints and associated negative PR was huge, a fact that current CEO Greg Fitzgerald has never shied away from. He went as far as stating that Bovis would no longer be “handing over crap or incomplete houses to customers”.
Bovis is keen to point out that its customer satisfaction rating is up by 30% to 87% compared to last year suggesting Fitzgerald is doing a good turnaround job.
However, The Independent claims that they have evidence that a number of Bovis customers are still being incentivised to give a positive response to the HBF survey. Allegedly, this has taken the form of gifts, home improvements or paying of household bills.
What strikes me about this story is the small number of customers this relates to. Just nine, to be precise, who bought properties over the past two years. Keeping in mind that Bovis sells around 4,000 homes per year, as a percentage, this group is tiny. That’s not to say that incentivising a positive customer response on the HBF survey is acceptable, if indeed, that’s what has happened.
Also of note is that only The Independent deemed this story newsworthy, adding to my suspicion that this is just a few isolated incidents in a company making decent strides in the right direction.
Read more at: The Independent