Beware the “Developer’s Pledge”.
Perhaps the phrase deserves to be used more widely as a general description for a worthless promise. – Owl
Rupert Neate www.theguardian.com
Jeff Fairburn, the former chief executive of the housebuilder Persimmon, has failed to set up a charity three years after pledging to do so in an attempt to assuage public and political anger at his £82m bonus.
Fairburn has not registered a charity with the Charity Commission or made any inquiries about how to set one up, after he said on 14 February 2018 he would donate a “substantial proportion” of his bonus to a charitable trust. The furore over the payout, believed to be one of the most generous in the FTSE 100 at the time, led to the chief executive losing his job later that year after the company said it was having a negative impact on the reputation of the business.
The controversial bonus payment resulted from a scheme linked to the housebuilder’s share price, which soared thanks to the government’s help-to-buy programme. About half of Persimmon’s homes are bought with its assistance.
Fairburn is also not named as a trustee of any charity in England or Wales. It is not known whether he has donated to any separate existing charity. He did not respond to repeated requests for comment, nor did several of his colleagues at the housebuilding company.
The revelation that Fairburn appears not to have set up a foundation to donate any of his bonus comes days after his former company set aside £75m to pay for work needed to remove flammable cladding on its high-rise buildings following the Grenfell Tower fire. An independent review in 2019 had found that Persimmon had built homes so shoddily that it left its customers exposed to an “intolerable risk” in the event of fire.
Garry White, chief investment commentator at investment firm Charles Stanley, said: “Jeff Fairburn won the equivalent of an LTIP [long-term incentive plan] lottery. The ticket was handed to him by [former chancellor] George Osborne, but was bought for him by Britain’s taxpayers.
“About half the company’s houses are sold via the government-backed help-to-buy scheme and the debacle demonstrates why LTIPs are a poor way to reward company executives. Share price moves can be gamed by corporate action such as share buybacks and the imperfect system introduced by Persimmon has given the impression of corporate looting. All such schemes should have an upper limit.”
While Fairburn appears not to have set up the promised charity, he has re-entered the housebuilding market after buying a 50% stake in Yorkshire house builder Berkeley DeVeer and becoming its chief executive. In a press release announcing his investment in Berkeley DeVeer last year, Fairburn said: “I’m honoured to join the company as CEO, and to have become a significant investor.”
A Charity Commission spokeswoman said: “We have no record of a registered charity bearing Jeff Fairburn’s name. Nor does it appear Mr Fairburn is a current trustee of an active charity. We can’t categorically state that no charity has been registered that involves Mr Fairburn in some capacity. It would also not be possible for us to confirm whether or not any funds have been donated via another charity.”
Luke Hildyard, the executive director of the High Pay Centre thinktank, said: “When this obviously excessive and unearned payment was first made, the promise that a substantial portion would be used to set up a charity enabled Persimmon to draw a line under the affair. So there is a moral onus on Fairburn to provide some transparency over the matter.
“Charitable giving by the super-rich is claimed to be an example of the so-called ‘trickle-down’ effect but as this case suggests, philanthropy can be highly whimsical, opaque and unaccountable. The benefits it provides for wider society are minimal compared to proper taxation of extreme wealth.”