Housebuilding firm’s shares fall after chief quits over pay package row

Jolyon Harrison

Shares in housebuilder MJ Gleeson are down almost 10% this morning after it was announced that the company’s chief executive has left the business in a row about his salary.

Jolyon Harrison has earned more than £13m in the seven years he has led the Sheffield-based business. Its share price is now eight times higher than when he took charge in July 2012, and Friday’s closing price values the company at £480m.

But in a statement to the stock market, the company said: “Following extensive discussions with Mr Harrison regarding his remuneration and succession planning, the Board concluded that it was not possible to find a mutually acceptable basis for Mr Harrison to continue as chief executive officer.”

The company’s stock is currently trading at 800 pence per share at 86 pence, down 9.71%.

Harrison has only once earned less than £1.5m in the six full financial years that he has been chief executive for, although his 2019 package was expected to be lower before the impact of any compensation for loss of office.

In three of his six years he earned nearly £3m, including in 2017 and 2018.

The company announced that James Thomson will join the board as chief executive on an interim basis with immediate effect.

Thomson is formerly chief executive of Keepmoat Homes, a private equity owned housebuilder selling over 4,000 homes a year, and where Thomson remains a non-executive director and shareholder.

“The board is initiating a search process, which will include both internal and external candidates, to identify a long-term CEO appointment,” the company added.

Harrison’s departure follows the pay-related exit of the group chief executive of York-based housebuilder Persimmon.

Jeff Fairburn stepped down late last year following the controversy surrounding his £75m bonus. Directors at Persimmon were given huge bonuses under the company’s Long Term Incentive Plan dating back to 2012.

Fairburn initially received £100m, but after being criticised for taking such a large bonus from an uncapped scheme which was set up before he joined the firm, he agreed to donate £25m to charity to take his bonus to £75m. In August, it was also revealed that Fairburn was the highest paid CEO in the financial year ending 2017 after receiving £47.1m, 22 times his 2016 pay.

Russ Mould, investment director at AJ Bell, says the housebuilding sector seems to be “developing a reputation for pay-related spats”.

“We’ve seen Jeff Fairburn leave Persimmon following political and shareholder backlash over a gigantic bonus. Berkeley Group fought a shareholder revolt in 2017 over very large payments to various directors. And now we have Jolyon Harrison leave MJ Gleeson over a row regarding his remuneration.

“The housebuilding industry has enjoyed significant profits for many years but is now facing cost inflation and a slowing property market. If that’s not enough, companies in general are under increasing pressure from investors to clamp down on excessive pay.

“Admittedly, Gleeson’s shareholders have enjoyed strong returns since Harrison was made CEO on 1 July 2012. Assuming all dividends were reinvested, Gleeson has returned 728% during his time at the top. That’s nearly 10 times as much as delivered by the FTSE 100 over the same period (73%).

“The fact that Harrison has now gone shows that the board are taking a pragmatic view over remuneration and governance in general, which is to be applauded.”

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