Persimmon has announced the departure of its chief executive – only 15 months since he took over in the wake of a backlash against his predecessor’s £75m bonus.
Dave Jenkinson is leaving despite the housebuilder posting a profit of more than £1bn for the second year in a row. On Thursday, Persimmon revealed a pre-tax profit of £1.04bn for 2019, down slightly from the previous year’s £1.09bn, which was the biggest annual profit ever made by a UK housebuilder. It banked a profit of £65,657 on every house sold, compared with £66,326 in 2018.
However, Persimmon has been under pressure over the quality of its houses – on top of the pay row. Jenkinson, previously the managing director of the York-based business, has spent 23 years at the company and has informed the board of his wish to step down “in due course”, Persimmon said. The firm has started looking for a successor.
Julie Palmer, a partner at the corporate restructuring consultancy Begbies Traynor, said: “Persimmon’s financials may be on a solid base currently but the company’s reputation is continuing to show cracks as reports of customer complaints are rife for the housebuilder, with concerns around its build quality.
“This has ultimately led to Dave Jenkinson’s departure and his replacement will need to rebuild the company’s image.”
Persimmon is battling to restore its tarnished reputation. In December an independent review commissioned by the firm found a “systemic nationwide failure” to install fire-stopping cavity barriers that left customers exposed to an “intolerable” fire risk. It also said the failure to meet minimum building standards was “a manifestation of poor culture” at the firm.
Jenkinson’s predecessor, Jeff Fairburn, then the UK’s highest-paid chief executive, was ousted in November 2018. His £75m bonus in 2018 was attacked as “obscene” by politicians, charities and corporate governance experts – in particular because Persimmon has been one of the biggest beneficiaries of the government’s help-to-buy programme, which will run until 2023. It accounted for 43% of the firm’s sales last year. Jenkinson also received £45m in pay and bonuses in 2017 and 2018.
Persimmon sold 15,855 houses last year, down 4% on 2018 after it slowed down the build process to improve quality following a deluge of complaints from customers. Problems with poor workmanship extended to the upmarket Charles Church brand owned by Persimmon. The average selling price rose to £215,709 from £215,563.
The last annual report showed Fairburn was given nearly £85m in pay and bonuses for 2017 and 2018 while Mike Killoran, the finance director, received nearly £63m. The payments were part of a £444m pay bonanza for the firm’s most senior bosses.
Jenkinson said: “I’m very pleased with the progress that we’ve made over the last year in reshaping Persimmon’s approach and culture while at the same time maintaining our operational momentum.”