The Men Who Run Persimmon plc

What you need to know about the top executives of house-builder Persimmon plc (LON:PSN).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Management can make all the difference to a company’s success and thus its share price.

The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In this series, I’m assessing the boardrooms of companies within the FTSE 100. I hope to separate the management teams that are worth following from those that are not. Today I am looking at Persimmon (LSE: PSN), the house-builder that rejoined the FTSE 100 in June after it fell out of the index in 2008.

Here are the key directors:

Director Position
Nicholas Wrigley (non-exec) Chairman
Jeff Fairburn Chief Executive
Miles Killoran Finance Director
Nigel Greenaway South Division CEO

A qualified accountant, Nicholas Wrigley works as an M&A advisor at Rothschild, one of the few FTSE 100 chairman still in an executive job. He has been on the board since 2006 and stepped up to chairman in 2011 when the previous incumbent retired after 32 years with the company.

New CEO

Jeff Fairburn has only been CEO since April. He joined the firm in 1989 and rose though management positions, mainly in Persimmon’s northern division. He was appointed to the board in 2009 and became group managing director, responsible for operations and the land bank.

However that’s too recent for him to share credit for Persimmon’s record as the only listed house-builder that didn’t need shareholder cash after the financial crisis. Since his appointment, Persimmon has inaugurated a programme to return excess cash to shareholders.

Crisis

Mike Killoran has been finance director since 1999, so can take credit for successfully steering Persimmon through the financial crisis, playing a leading part in downsizing the business and renegotiating bank loans. A chartered accountant, he joined the firm in 1996 after finance roles in other northern companies.

Nigel Greenaway joined Persimmon in 1986. He assumed responsibility for the southern division in 2005 and was elevated to the board in January this year.

Four non-execs are led by Richard Pennycook, finance director of the Co-op Group and formerly William Morrison. They have a mix of backgrounds but the lack of cross-directorships with other FTSE 100 companies points to Persimmon’s relatively junior status in the index. They equal in number the three long-serving executives and a chairman who has been on the board for seven years.

Shareholder revolt

22% of Persimmon’s shareholders voted against the most recent remuneration report after the UK shareholders’ Association came out against a “golden goodbye” for the outgoing CEO and a long-term incentive plan under which most of the grants had already been made.

I analyse management teams from five different angles to help work out a verdict. Here’s my assessment:

1. Reputation. Management CVs and track record.

Good.

 Score 3/5

2. Performance. Success at the company.

Strong.

Score 4/5

3. Board Composition. Skills, experience, balance.

Logical but entrenched management.

 Score 3/5

4. Remuneration. Fairness of pay, link to performance.

See above.

 Score 2/5

5. Directors’ Holdings, compared to their pay.

CEO has £1m-worth of shares, FD £6m.

 Score 4/5

Overall, Persimmon scores 16 out of 25, just under the median result. The company’s “owner-manager” ethos and longevity of management has served it well through the crisis and into the resurgence of the sector, but external oversight is relatively weak for a FTSE 100 company and management have perhaps been a little greedy.

I’ve collated all my FTSE 100 boardroom verdicts on this summary page.

Buffett’s favourite FTSE share

Legendary investor Warren Buffett has always looked for impressive management teams when picking stocks. His recent acquisition, Heinz, has long had a reputation for strong management. Indeed Mr Buffett praised its “excellent management” alongside its high quality products and continuous innovation.

So I think it’s important to tell you about the FTSE 100 company in which the billionaire stock-picker has a substantial stake. A special free report from The Motley Fool — “The One UK Share Warren Buffett Loves” — explains Mr Buffett’s purchase and investing logic in full.

And Mr Buffett, don’t forget, rarely invests outside his native United States, which to my mind makes this British blue chip — and its management — all the more attractive. So why not download the report today? It’s totally free and comes with no further obligation.

> Tony does not own any shares mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Why the FTSE 250 looks an incredible bargain

While all the attention is on the elite FTSE 100, the mid-cap FTSE 250 index looks unbelievably cheap. I don't…

Read more »

2024 year number handwritten on a sandy beach at sunrise
Investing Articles

Here’s my plan to make the most of juicy UK shares ahead of 2024 and beyond!

Our writer reckons there hasn't been a better time to snap up quality UK shares. She explains how she's planning…

Read more »

Young Black woman using a debit card at an ATM to withdraw money
Investing Articles

Here’s how many Lloyds shares I’d need to buy for a £100 monthly income!

Offering a higher dividend yield than the average across FTSE 100 stocks, are Lloyds shares worth buying for passive income…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

Up 27% in 2023, what next for the Tesco share price in 2024?

The Tesco share price has had a great 2023, rising 27% while the FTSE 100 was flat. But what might…

Read more »

Hand is turning a dice and changes the direction of an arrow symbolizing that the value of an ETF (Exchange Traded Fund) is going up (or vice versa)
Investing Articles

FTSE 250? No, I’d buy this index fund instead

Investing in index funds can be a profitable enterprise. Our author has been exploring the different options to determine the…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

This 4% yielding FTSE 100 giant is dirt-cheap and perfect for passive income!

Looking for a mammoth business with shares trading at discount levels and offering an excellent passive income opportunity? Our writer…

Read more »

UK money in a Jar on a background
Investing Articles

Here’s how I’d use dividend shares to try and turn £5,000 of savings into passive income of £900 a year

With dividend shares at today’s prices, Stephen Wright thinks there are two ways to turn a £5,000 investment into something…

Read more »

Investing Articles

After a recovery that Lazarus would have been proud of, is the easyJet share price worth a look?

With its dividend restored and its balance sheet repaired, the easyJet share price looks like a bargain. But Stephen Wright…

Read more »