The UK’s highest paid chief executive, Jeff Fairburn of housebuilder Persimmon, has been ousted just four months after collecting a £75m bonus.

The huge payout – awarded for “outstanding performance” – unleashed a furore about executive excess, and on Wednesday Persimmon said Fairburn was stepping down at the request of the company because the controversy was having a negative impact on the reputation of the business.

Fairburn’s exit comes weeks after he walked out of a TV interview having refused to answer questions about his taxpayer-fuelled bonus. Fairburn told the BBC journalist it was “really unfortunate that you’ve done that [asked about the bonus]”, before walking out of shot.

Play Video 0:46 Persimmon CEO walks away from interview when asked about £75m bonus – video

The man stepping into Fairburn’s shoes, managing director David Jenkinson, collected a bonus worth £40.5m from the same long-term incentive plan (LTIP).

The bonus scheme, believed to be most generous ever from a FTSE 100 company, paid out about £500m worth of shares to 150 senior staff. Fairburn had been in line for a £110m payout before it was scaled back in the face of political and public outrage.

The vast bonuses result from a scheme linked to the housebuilder’s share price, which soared thanks to the taxpayer-backed help-to-buy scheme. About half of Persimmon’s homes are bought with the assistance of the government scheme.

Persimmon said that because it had asked Fairburn to leave it was legally prevented from asking for him to return any of his bonus. A spokesman conceded that had Fairburn left the firm of his own accord, he would have had to hand back £9.7m. “As Jeff is leaving at the company’s request, legal advice has confirmed that the company does not have any discretion to withhold or seek forfeiture [of the bonus shares],” the company said.

The revelation sparked fresh political anger on Wednesday. Labour MP Rachel Reeves, who chairs the business, energy and industrial strategy select committee, said it was “right that he’s going, [but] wrong that he walks away with so much money”.

“This hugely excessive payout is not a reflection of his personal performance, it is a reflection of the government’s help-to-buy scheme which has fuelled the housing market,” she told the Guardian. “The scheme was introduced to help people get on the housing ladder, not reward executives with multimillion-pound payouts.

“Persimmon does not pay the living wage and yet can afford obscene payouts for the chief exec,” she said. “It is totally unjustifiable that they can afford to give one bloke £75m but they say they can’t pay their cleaners, security staff and people working in the canteen a living wage, which has to be topped up by universal credit”.

The company said it had signed up to pay the £9 an hour living wage from January 2019. The average salary at the firm is £35,600.

Rachel Reeves (@RachelReevesMP) Persimmon does not pay the living wage and yet can afford obscene payouts for the chief exec. Right that he’s going, wrong that he walks away with so much money. ⁦@CommonsBEIS⁩ https://t.co/Hf5UKD8s8U



The leader of the Liberal Democrats, Vince Cable, demanded the government intervene to change executive pay rules. “It is a ridiculous situation when you can keep £75m for being sacked,” he said. “He ought to have gone a long time ago, it seems that the board has finally learned that it cannot overpay greedy executives. This situation cannot be allowed to happen again and other executives must understand from this – excessive greed is no longer tolerable.”

Fairburn, who has worked at York-based Persimmon for 29 years, attempted to dampen the controversy in February by stating that he would donate a “substantial” amount of his windfall to charity. Speaking on Wednesday, he said: “I had hoped that revealing my plans to create a charitable trust and to waive a proportion of the award would enable the company to put the issue of the 2012 LTIP behind it. However, this has not been the case and so it is clearly now in the best interests of Persimmon that I should step down.”

Fairburn, 52, has repeatedly refused to state how much he intents to donate to charity or which causes he will support. The Guardian has previously calculated that his bonus could be used to help home all of the 760 homeless families in Yorkshire and Humber.

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Euan Stirling, head of stewardship at Standard Life Aberdeen, one of Persimmon’s biggest shareholders, said: “Persimmon’s reputation has been tarnished by issues around Jeff Fairburn’s pay.” At the company’s annual meeting earlier this year, Stirling launched an astonishing attack on the board for approving “such excessive” payments.

“Regardless of any moral or societal duties, company directors have a legal responsibility to act in the best long-term interests of the company that employs them,” Stirling said. “Today’s remuneration results suggest that the executive directors at Persimmon have lost sight of that because the long-term success of the company is being endangered by the reputational damage associated with grossly excessive pay.” In its statement on Wednesday Persimmon admitted the pay row had become a “distraction”.

Garry White, chief investment commentator at investment manager Charles Stanley, said: “Jeff Fairburn won the equivalent of an LTIP lottery. The ticket was handed to him by George Osborne, but was bought for him by Britain 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.”