Taylor Woodrow chief leaves after five months

Click to follow
The Independent Online
Taylor Woodrow, the property and construction group, has parted company with its chief executive, who has spent just five months in the job. The departure of John Castle, the first outside chief executive at Taylor Woodrow in its 75-year history, has resulted from a "fundamental incompatibility" between him and the rest of the board. Nigel Cope, City Correspondent reports.

Taylor Woodrow said Mr Castle had resigned by mutual agreement and left the company with immediate effect. It appears that Mr Castle, who joined the company in June, had failed to build a good working relationship with the group's divisional directors. The non-executive directors, led by Sir Kit McMahon, the former chairman of Midland Bank, agreed it was better to take early action than let the personality clash worsen. The company said Mr Castle's departure was not due to a dispute over future strategy.

Mr Castle was on a salary of pounds 225,000 a year and is in line for a pay- off of equivalent to 1.8 times salary. This means he stands to make almost pounds 500,000 for five months' work.

Colin Parsons, the former chief executive who had moved up to executive chairman, will take over as acting chief executive until a replacement can be found. Sir Kit will become deputy chairman. Sir Kit said: "I'm afraid it recently became clear to the non-executives that John's appointment wasn't working and it was better to solve the problem now rather than later. We realised that he was unable to build the sort of relationships with his fellow directors that a chief executive needs."

Mr Parsons attempted to limit the damage of the boardroom fall-out in the City by saying that Taylor Woodrow was in "excellent financial health and is anticipating another year of steadily improving results as indicated at the time of the recent interim results".

Mr Castle joined Taylor Woodrow after spells with Marley, the building materials group, and the American conglomerate, Textron. He had met the divisional directors prior to taking up the post and it appeared there was a brief "honeymoon period" of a month to six weeks, during which the board got along well.

But shortly after this, the non-executives became aware that relations were becoming strained.

The company denied any rift between Mr Castle and Mr Parsons, who had been chief executive of Taylor Wooodrow for five years from 1992 and had helped turn a pounds 94m loss into a pounds 67m profit. The group also dismissed speculation that the board had found it hard to adapt to an external appointment after 75 years of promoting from within.

Mr Castle had joined with the intention of reducing Taylor Woodrow's construction operations to make it a housing and property group with modest interests in construction rather than the other way around. The construction business has averaged a return on sales of less than 1 per cent since 1985.

He was under pressure to improve the group's meagre net returns of just 6 per cent on its annual sales of pounds 1.2bn.

In September Taylor Woodrow reported a 43 per cent jump in pre-tax profits to pounds 36.2m for the six months to June.

Some analysts said that Mr Castle may have felt constrained from taking the radical action some in the City were calling for due to the continued presence on the board of Mr Parsons. Mr Castle said he was in favour of evolution rather than revolution.

One of the ironies of Mr Castle's departure is that on the mantelpiece in his Mayfair office he kept a homily which read: "The Trap: to continue to do the same thing and expect a different outcome." After just 22 weeks in the job, this was certainly not the outcome he was expecting.

Taylor Woodrow shares closed 0.5p lower at 184.5p.