Persimmon plc (LON:PSN) (PSN.L) has announced today that its CEO, Jeff Fairburn, is stepping down. It is by mutual agreement and at the request of the company, with his remuneration from the 2012 LTIP (long-term incentive plan) continuing to have a negative impact on the business, according to today’s update.
Jeff Fairburn will be replaced by David Jenkinson, who is currently Group Managing Director, from 31 December 2018. The company has started a formal process to look for a permanent successor.
Alongside the news of a change in CEO, the company has released a trading update. It shows that demand for newbuild properties has remained robust in the third quarter, with private sales increasing by 3% versus the same period of the previous year.
Persimmon is now fully sold up for the current year and has £987 million of forward sales reserved beyond 2018. This is an increase of 9% on the same point of last year, with sales prices remaining firm across its regional markets.
The company has seen resilient consumer confidence as well as continued mortgage lender support. It reports that market conditions have been positive, which I think bodes well for its performance over the medium term.
In my view, Jeff Fairburn has done a good job as CEO. In recent years the company has been able to significantly improve its profitability, while putting in place a strong balance sheet and large land bank. Therefore, I wouldn’t be surprised if there is a degree of volatility in the company’s shares in the near term as it seeks to find a permanent replacement.
In terms of Persimmon’s performance, it seems to be on track to deliver on its goals. Although Brexit-related uncertainty may build in future months, low interest rates and the Help to Buy scheme could keep demand for new homes high. As a result, I’m upbeat about the stock’s long-term growth outlook.