The boss of one of Britain’s biggest builders has seen his bonus swell by more than £200,000 a day in recent weeks as the company cashes in on Help to Buy.
Jeff Fairburn, the chief executive of Persimmon, is in line to collect shares in the company worth £131million on the back of soaring profits.
The value of the windfall has increased by £8.5million since the start of December – or £212,500 a day – and by £45million since the start of last year, when he was nicknamed ‘Mr £100million’. In his first interview since the scale of the bonus was announced, Mr Fairburn insisted the payout must be taken ‘into context of what has been achieved’.
Jeff Fairburn is in line to collect shares in the company worth £131million on the back of soaring profits
Last month, Nicholas Wrigley quit as chairman of Persimmon as the row over the bonus plan exploded into the open.
Persimmon has built more than 80,000 new homes since the bonus scheme was approved by shareholders in 2011
‘Of course I’m responsible at the end of the day, and the business has done very well,’ he told The Guardian. ‘We’ve worked very hard as a team to get to where we are now.’ Mr Fairburn, 51, is not the only senior figure at the company set to benefit. In total, 140 Persimmon managers are set to share stock worth nearly £650million in what is thought to be the biggest bonus scheme in British corporate history.
The payouts were branded ‘obscene’ at a time when many families struggle to get on the property ladder because of a chronic shortage of homes and rising prices.
Critics argued that the bonus pot has been inflated by the Government’s Help to Buy initiative, which they said had pushed up house prices and offered builders a taxpayer subsidy. More than half of Persimmon homes are sold through Help to Buy. Persimmon has also benefited from the sale of leasehold homes – a practice due to be outlawed following a series of exposés by the Daily Mail.
Last month, Nicholas Wrigley quit as chairman of Persimmon as the row over the bonus plan exploded into the open. But Mr Fairburn yesterday defended it, saying ‘it has done exactly what it set out to do’ by boosting the number of homes the company builds.
Cranfield School of Management finance expert Ruth Bender said that Persimmon and Mr Fairburn ‘had a huge dollop of luck from Help to Buy’
Since the bonus scheme was approved by shareholders in 2012, Persimmon has built more than 80,000 new homes, with annual production up 70 per cent. ‘We have made a significant contribution to increasing UK housing supply,’ the company said.
Mr Fairburn admitted demand has been ‘created through the Help to Buy scheme’ that offers families taxpayers’ cash so they can get a mortgage. ‘We are looking to meet that demand,’ he said.
His comments came as Persimmon revealed that revenues rose 9 per cent to £3.42billion last year. It sold 16,043 newly-built homes – an increase of 872 or 6 per cent on the previous year – and the average selling price rose 3 per cent to £213,300.
Shares in the company have risen by more than 200 per cent since the scheme’s launch in 2013 – pushing up the value of the bonus pot.
Mr Fairburn has been entitled to collect 40 per cent of the shares since January 1 but has yet to do so. The rest of the shares will be paid if certain targets are hit.
Ruth Bender, professor of corporate financial strategy at Cranfield School of Management, said Persimmon and Mr Fairburn ‘had a huge dollop of luck from Help to Buy’. She added: ‘There is obviously an element of good management, but they would have never made those good results without the regulation.’
Paula Higgins, of the HomeOwners Alliance campaign group, said: ‘It is absolutely shocking. These bosses are getting huge windfalls because the Government is subsidising the housebuilders through Help to Buy.’