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Housebuilder Vistry has sacked a senior executive as it recovers from an accounting error.
The developer eliminated the chief operating officer position yesterday to “ensure greater proximity of the CEO to the company.”
But the move is unlikely to reassure investors who are concerned about boss Greg Fitzgerald’s powerful role as chief executive, effectively filling the role of president and chief executive.
Concerns: Vistry has removed its chief operating officer, Earl Sibley (left). But investors remained concerned about boss Greg Fitzgerald (R) in the powerful role of chief executive.
And this follows a major accounting error that will cut profits by £165m and has seen the FTSE 100 company’s share price more than halve in just over a month.
Fitzgerald reportedly offered to resign over the matter, revealed in a trading update in October, but the board rejected his proposal.
However, in a management shake-up, Bovis Homes owner Vistry announced yesterday that chief operating officer Earl Sibley will step down as a director.
Following a transfer, Sibley, who has worked for Vistry for almost a decade, will leave at the end of the year.
The company said eliminating his position will reduce “the length of reporting lines” and allow Fitzgerald, 60, to have more direct oversight of the business.
But it comes amid shareholder concerns that Fitzgerald, who oversaw the £1.25bn merger with Countryside in 2022, already has too much control.
Vistry shares fell a further 5.4 per cent, or 36.5p, to 634p yesterday following the announcement.
Dan Coatsworth, investment analyst at AJ Bell, said the accounting error, which saw Vistry issue two profit warnings in quick succession, was “embarrassing”.
“It appears to have led CEO Greg Fitzgerald to change the reporting structure to be closer to the engine room,” he said.
‘Fitzgerald, watching every move, suggests that no more mistakes will be tolerated and that it will now be his job on the line if things don’t improve.
Getting rid of the COO position is not out of the ordinary if other senior staff members are integrated into the operational strategy, but one has to wonder if this is just a temporary measure to steady the ship.
“It’s not that Fitzgerald doesn’t already have enough work with a joint CEO and president position.”
Crisis: An accounting error will cut Vistry’s profits by £165m and has seen the FTSE 100 company’s share price more than halve in just over a month.
Oli Creasey, property analyst at Quilter Cheviot, said: “While the chief executive is known to be a shrewd operator, it is worth noting that he is not universally popular, with around 20 per cent of shareholders recently voting against him. his re-election”.
He added: “It will be interesting to see if this change allows it to better manage local divisions and improve overall performance.”
The restructuring comes after Vistry said in October it had underestimated development costs at nine sites in its southern division by around 10 per cent, and would hit profits by £115m over three years.
And it issued a second £50m profit warning this month, taking the total to £165m.
An independent review found that “the pressure felt for organizational change” was a key factor in Vistry’s southern division, The Sunday Times newspaper reported.
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