Persimmon has announced the departure of its chief executive as the housebuilder scrambles to improve the quality of its homes following a damning independent review and a deluge of customer complaints.
The departure of Dave Jenkinson was revealed only 15 months after he took over in the wake of a backlash against his predecessor’s £75m bonus. He is leaving despite the business posting a profit of more than £1bn for the second year in a row on Thursday.
Persimmon reported 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.
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. He may remain at the helm for a few more months while the firm looks 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.”
In December, an independent review commissioned by the firm found a “systemic nationwide failure” to install fire-stopping cavity barriers in its timber-frame houses that left customers exposed to an “intolerable” fire risk. The report also said the failure to meet minimum building standards was “a manifestation of poor culture” at the firm.
In response, Persimmon is carrying out a review into its “purpose and culture” and will report on it at its annual meeting in April. It has also appointed a new construction champion to oversee construction processes and standards centrally.
The company has inspected more than 20,000 of its properties, found a third had insufficient fire protection and fixed them. Inspections continue and will involve tens of thousands more homes – about a third of the houses Persimmon builds every year are timber frame. It is not paying out any compensation to customers in relation to the issue.
Persimmon sold 15,855 houses last year, down 4% on 2018 after it slowed down the build process to improve quality. Problems with poor workmanship extended to the upmarket Charles Church brand owned by Persimmon. However, the average selling price rose to £215,709 from £215,563.
The scandal over fire risks and general build quality comes after a hugely damaging pay row. 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. The scheme accounted for 43% of the firm’s sales last year. Jenkinson also received £45m in pay and bonuses in 2017 and 2018. The payments were part of a £444m pay bonanza for the firm’s most senior bosses. Persimmon says there won’t be any more payouts under that share bonus scheme, which dates back to 2012.
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.”
He insisted that the build improvement programme was on track. “[The changes] are embedding, they are working, we are seeing tons of improvements. The reason I’m leaving is because the business is in such a good process.”
Shares in Persimmon were down 5.5% at £29.08 by midday on Thursday, valuing the company at £9.4bn.