MPs will be grilling Persimmon this week about the obscenely large pay at the housebuilder, but the business select committee has missed a trick by not summoning £75million Jeff Fairburn, the chief executive and chief beneficiary of the discredited incentive scheme.
Instead, the committee is hauling up Marion Sears, a non-executive director who wasn’t even at the company when it first cooked up the ill-starred incentive scheme that is paying out so lavishly.
Ms Sears has only been chair of the pay committee since late last year, when her predecessor resigned for his part in the debacle at the business.
The business select committee has missed a trick by not summoning £75million Jeff Fairburn, the chief executive and chief beneficiary of Persimmon
It’s ridiculous that she is the one to be questioned when it is taciturn Jeff that everyone wants to hear from.
He is probably delighted to have escaped a summons, since he has been taking the strong and silent approach to new levels. The tongue-tied boss has refused to respond to questioning from reporters and even from shareholders at the annual meeting.
Yet he has no right to remain stumm – he is accountable to the shareholders who own the company and ultimately are being forced to pay his wages, and to taxpayers who have been indirectly subsidising his jackpot through the Help to Buy Scheme.
MPs should call in Jeff next and demand he provide some answers. Here are five questions they should ask.
1. Does he accept he has damaged his industry’s reputation? One rival industry chief has described the pay package as ‘very, very wrong’ and doing the whole industry a disservice.
2. How does he respond to questions from Euan Stirling of Standard Life over whether he may have breached company law? Section 172 of the Companies Act says directors have a legal responsibility to act in the best long-term interests of the company that employs them – and Stirling thinks the incentive scheme may have endangered Persimmon’s success.
3. Does he accept there are wider ramifications and that he has done damage to corporate Britain? Many business leaders fear that anger about excessive pay will encourage voters to elect Jeremy Corbyn, with disastrous consequences.
The discipline of economics, is too abstract, too inward-looking, too prone to claiming spurious accuracy and too remote from ordinary people’s lives
4. How long does he think he can keep his job? The chairman and the chair of the pay committee fell on their swords, but he is still in post. They rightly took responsibility for their part in the design of a flawed pay scheme, but Fairburn should accept his share too. He could have chosen graciously to take a more reasonable amount but instead did too little, too late.
5. Why hasn’t he said sorry? Although the interim chairman has offered an unreserved apology to investors, Fairburn himself has never expressed public contrition. Why not? An apology costs nothing.
Jobs for the girls
Yet more sexism in the City is coming our way. First, the ludicrous excuses given by dinosaur FTSE bosses for failing to hire women to their boards, including ‘my colleagues don’t want a woman’ and women ‘don’t fit comfortably’.
How sad that there are men running companies who even think like this in the recesses of their own mind, let alone actually say it out loud. At least this proves that if all the idiotic males were cleared out, there would be plenty of room for talented women.
The row over the Bank of England appointing the lone male applicant out of a shortlist of five to its Monetary Policy Committee (should that be Male Policy Committee?) is a little more nuanced, however. It’s terrible that the MPC has only one female member. After all, the most powerful central bank in the world, the US Federal Reserve, was until recently run by a woman, Janet Yellen, so there is no excuse. It isn’t just a matter of gender equality.
The discipline of economics, as practised overwhelmingly by middle class white men, is too abstract, too inward-looking, too prone to claiming spurious accuracy and too remote from ordinary people’s lives.
If it were a more diverse profession – not only in terms of gender – the range and depth of economic thought would be greater and the MPC might be better able to communicate with an often baffled public.