MJ Gleeson shares fall as chief executive quits after pay row

MJ Gleeson builds affordable houses in the North
MJ Gleeson builds affordable houses in the North
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Northern housebuilder MJ Gleeson has announced the shock departure of its chief executive Jolyon Harrison after a row over pay and succession planning.

Mr Harrison, who earned nearly £3m last year, has left the Sheffield-based company with immediate effect and will be replaced in the short term by ex Keepmoat CEO James Thomson, who will take on the role of interim CEO.

The group’s shares fell nearly 10 per cent.

Gleeson said it was unable to agree acceptable terms with Mr Harrison, after an ongoing debate over “remuneration and succession planning”.

Mr Harrison left the firm after discussions collapsed as the two sides could not find a compromise over Mr Harrison’s request that his total annual pay be increased to more than £3m.

The other issue was finding a successor to Mr Harrison, 71, who was not keen to discuss his departure.

One analyst said: “There is no doubt that Jolyon has built the business into what it is today, but the good news is the business has some other extremely good people. Gleeson has a great operational team.”

The firm will now do an extensive search, both internally and externally, to find a replacement for Mr Harrison.

Mr Thomson could take on the role full time if he is deemed to be the best person for the job.

Mr Harrison was appointed as chief executive in July 2012, and has been paid around £12m during his time in the role, according to the most recent annual report.

Mr Thompson is the former chief executive of private equity-owned Keepmoat Homes, where he remains a non-executive director.

The company said it has a very strong management team despite Mr Harrison’s exit, and said it is well-placed to deliver profit and revenue growth over the rest of the year.

It is due to provide shareholders with a trading update early next month, before announcing its full year figures in September.

It held firm on previous guidance that it expects to deliver figures in line with its full year expectations.

Analyst Charlie Campbell at Liberum said: “While this is disappointing and surprising, as Mr Harrison was key to establishing and scaling up Gleeson’s business model, we note that the business is not as dependent on him as it once was.

“Gleeson is bringing in James Thomson (ex Keepmoat CEO) as interim CEO and we note that the COO and MD have built up significant experience in the Gleeson model.

“We are convinced that the model will not be changed and will continue to be scaled up across Northern England and beyond and that this change will not de-rail the strategic land process. We continue to see upside to our unchanged target price of 900p.”

Analyst Alex Stout at Peel Hunt said: “Jolyon was a highly influential character in the group and core to its expansion since joining in 2010.

“In light of this management change and the strong run in the shares in the year to date, which has left the valuation looking stretched, we move our recommendation to reduce from hold.”

Mr Thomson was finance director of DTZ Holdings from 2011 until the operational business of DTZ was sold as a going concern in 2011.

Mr Harrison’s departure comes less than a year after the resignation of York-based Persimmon’s chief executive Jeff Fairburn over a £75m bonus.