MJ Gleeson CEO steps down amid pay row

Shares in MJ Gleeson slumped on Monday after the houebuilder said its chief executive has stepped down with immediate effect in a row over pay.

The company said that following "extensive discussions" with Jolyon Harrison regarding his remuneration and succession planning, it was not possible to find "a mutually acceptable basis" for him to stay on as CEO.

Gleeson, which also took the opportunity to back its full-year guidance, said James Thomson will join the board as CEO on an interim basis with immediate effect. He was previously CEO of private equity-owned housebuilder Keepmoat Homes.

The company said it has initiated a search process, which will include both internal and external candidates, to identify a long-term CEO appointment.

"The board believes that the company is very well placed to continue to achieve strong growth in turnover and profits," it said, ahead of its next trading update in early July.

At 1130 BST, the shares were down 9.7% at 800p.

Russ Mould, investment director at AJ Bell, said: "The housebuilding sector seems to be developing a reputation for pay-related spats. We’ve seen Jeff Fairburn leave Persimmon following political and shareholder backlash over a gigantic bonus. Berkeley Group fought a shareholder revolt in 2017 over very large payments to various directors. And now we have Jolyon Harrison leave MJ Gleeson over a row regarding his remuneration.

"The housebuilding industry has enjoyed significant profits for many years but is now facing cost inflation and a slowing property market. If that’s not enough, companies in general are under increasing pressure from investors to clamp down on excessive pay.

"Admittedly, Gleeson’s shareholders have enjoyed strong returns since Harrison was made CEO on 1 July 2012. Assuming all dividends were reinvested, Gleeson has returned 728% during his time at the top. That’s nearly 10 times as much as delivered by the FTSE 100 over the same period (73%). The fact that Harrison has now gone shows that the board are taking a pragmatic view over remuneration and governance in general, which is to be applauded."

Broker Liberum said: "While this is disappointing and surprising, as he 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."