Steve Morgan says furore has ‘left cloud over industry’
Redrow chairman Steve Morgan has reignited his criticism of Persimmon’s bonus scheme branding it a “disgrace” that has allowed critics to accuse housebuilders of being too greedy.
Morgan said the controversy had led to accusations that the government’s Help to Buy initiative was being used by firms to ramp up profits and increase directors’ entitlements.
Earlier this year, Persimmon was forced to cut the bonuses it handed out to its top executives after coming under fierce criticism from shareholders, politicians and rival firms.
Under the long-term incentive plan, which it drew up back in 2012, Persimmon chief executive Jeff Fairburn was in line for a £110m bonus, chief financial officer Mike Killoran was set for a £78m payout and group managing director Dave Jenkinson was due to get £40m.
But Morgan (pictured), who publicly rebuked the bonuses earlier this year, used the firm’s annual results to condemn Perismmon’s bonus scheme in even stronger language calling it “a disgrace that has left a cloud over the industry”.
He added: “The reality is that the vast majority of house builders’ bonuses are normal and perfectly acceptable.”
And he said critics were using the furore to demand that the government’s Help to Buy scheme, introduced in 2013 and which has since been extended to 2021, be scrapped.
Liberal Democrat leader Vince Cable told Building earlier this year that bosses at Persimmon were “basically pocketing large amounts of money gifted by the taxpayer for executives, which underlined the stupidity of Help to Buy”.
But Morgan said: “What is just silly nonsense is saying that it [Help to Buy] is lining housebuilders’ profits. If we don’t build enough homes, we get criticised. If we do and make money, we get criticised. The focus should be on those it has helped which is first time buyers.”
Morgan’s chief executive at Redrow, John Tutte, said getting rid of Help to Buy would be “ridiculous” and added: “Anyone who comes to a common sense decision just won’t do that. It should continue as it is. If it’s not broken, don’t break it. It’s hugely successful.”
In the year to June 2018, Redrow turned in a record set of numbers with pre-tax profit jumping 21% to £380m on turnover up 16% to £1.9bn. The number of homes its built during the period was up 9% to 5,913.