Persimmon boss bags more than £100m bonus after year of strong sales

 
Oliver Gill
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Around 140 senior staff are now in line for a bumper payday (Source: Getty)

Persimmon boss Jeff Fairburn is in line to collect a bonus of more than £100m after the housebuilder posted a nine per cent growth in annual sales.

"Modestly" ahead of consensus expectations, Persimmon profits were boosted by average selling prices rising three per cent.

Annual revenues were £3.42bn as Persimmon increased legal completions by 872 new homes to 15,171.

As a result of a pay deal agreed with overwhelming shareholder support five years ago, today's figures mean Fairburn is in line for a bumper payday.

Last month Persimmon chairman Nicholas Wrigley and Jonathan Davie, the chair of its remuneration committee quit, after it was revealed Fairburn along with 140 senior management were in line for payouts totalling an estimated £800m in aggregate.

Read more: Persimmon's chairman has stepped down after pay row

Today, Fairburn's bonus, which will come in the form of shares, drew criticism from some experts.

"Although he has done a good job at the top of the company, it's happened because the government changed the regulations and they've had a huge dollop of luck from Help to Buy," Cranfield School of Management professor Ruth Bender told the BBC.

There is obviously an element of good management in it, but they would have never made those good results without the regulation.

Persimmon said it has made a "significant contribution to increasing UK housing supply" since 2012 by building more 80,000 new hones. Annual production has jumped by 70 per cent and cash coffers swelled in 2017 jumping, from £913m to £1.3bn.

What City analysts said

Hargreaves Lansdown equity analyst George Salmon said: "The pattern of housebuilders rising above more lacklustre data from the wider housing market is well-established.

"Sure enough, Persimmon has turned in another impressive performance despite the weaker than expected numbers in the latest Halifax survey. However, given the fact that uncertainty still hampers sentiment toward the sector, this update will nonetheless provide some reassurance for investors.

"In fact, with sales volumes and average prices continuing to rise, hopes will be high that Persimmon follows in the footsteps of Taylor Wimpey and Barratt Developments, the other two FTSE 100 listed national housebuilders, and bumps up its already generous dividend in February’s full-year results."

Robin Hardy of Shore Capital labelled today's announcement as "a solid but a little subdued trading update", calling the annual profits "decent".

He said Persimmon has the profit highest margins in the sector, adding: "But an inability to recover cost inflation going forwards (as selling prices stop rising and selling costs increase) [means] there is a medium-term risk... This is a sector-wide issue and not unique to Persimmon."

Read more: Persimmon defends £50m payout for Jeff Fairburn

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