Carillion boss offered senior staff bonuses to stop exodus

Aaron Morby 6 years ago
Share

Carillion handed senior staff special bonuses to stop an exodus after the firm issued the first bombshell profit warning.

Retention bonuses for senior managers below director level, salary increases for others, and a fee of £750 000 a year for the interim CEO, higher than his predecessor’s salary, were all agreed by the remuneration  committee.

MPs investigating Carillion’s collapse published fresh evidence on Monday showing how Carillion sought to boost and protect the rewards for its top executives as its finances deteriorated.

Acting CEO Keith Cochcrane wrote to selected senior staff:  “As you know, you are part of the team supporting the various projects we have underway at the moment that are critical to our success in 2017 and the business plan period up to 2019.

“We have a particularly challenging period to get through and your contribution is essential. With that in mind, I would like to invite you to participate in a retention bonus that will allow us to be assured of your services until at least the end of June 2018 and reward you for your contribution between now and then.

“These arrangements relate to a very limited group of people and should therefore not be discussed with anyone other than me.”

Fresh evidence also reveals that shareholders, including BlackRock, sought to limit the level of bonuses paid to board directors in 2016.

An attempt by Carillion’s board to increase the maximum bonus level to 150%  – although they promised not to use the maximum possible amount – was met with resistance, forcing the company to back down to 100% of salary maximum bonus pay-out.

MPs also criticised bosses’ contracts, which make it difficult to claw back their bonuses for any wrongdoing.

The joint committee said that the latest papers seemed to reinforce, the opinion of Amra Balic, Head of Stewardship at BlackRock, that Carillion’s board was more concerned with “how to remunerate executives rather than what was going on with the business”

Frank Field MP, Chair of the Pensions Committee, said: “It’s greed on stilts, pure and simple.”

Rachel Reeves, chair of the Business, Energy and Industrial Strategy Select Committee, said: “These RemCo papers are further evidence that when the walls were falling down around them, Carillion bosses were focussed on their own pay packets rather than their obligation to address the company’s deteriorating balance sheets.

“While these directors could still walk off with bonuses intact, workers were left fearing for their jobs and suppliers faced ruin. Carillion had a notorious reputation for late payments to suppliers.

“But while suppliers were waiting up to 120 days to be paid, Carillion directors were doing their upmost to ensure there was no impediment to their receipt of fat pay and bonuses. Finally, when even the Carillion RemCo considered asking for directors to return their bonuses, the system and culture was so dysfunctional, and the terms and clawback provisions so weak, that even this meek step was ruled out”.

 

Latest news

Taylor Wimpey chief honoured with CBE

Jennie Daly recognised in King's Birthday honours
1 day ago

Geoffrey Osborne supply chain hit for £26m

More than 500 suppliers and subcontractors left holding unpaid bills
2 days ago

SME contractors agree 4% pay rise for site workers

Workers will also get an extra day of holiday
2 days ago

Labour to mothball £320m A27 job to fix potholes

Manifesto confirms Arundel Bypass canned as "poor value for money"
2 days ago

Lendlease’s £1.9bn Smithfield Birmingham scheme approved

Initial work to start later this year despite questions over Lendlease's degree of involvement
2 days ago

Crest Nicholson rejects £650m Bellway bid

Second Bellway approach rebuffed
3 days ago

Hill submits £800m East London estate rebuild plan

Over 1,900 homes to be built in five phase at Teviot Estate in Poplar
3 days ago

Plan approved for 8,500-seat Edinburgh indoor arena

Construction expected to start next year once a contractor is appointed
2 days ago

Statom starts on £25m Bristol Airport precast car park

Major work package on transport upgrade being overseen by Griffiths Farrans JV
3 days ago

Build problems plunge Crest Nicholson to a £31m loss

House builder unearths more defects on completed sites
3 days ago

Rebooted Amey lifts contract win rate to 1 in 3 bids

Amey chief says firm exceeded expectations in first year under new owners
3 days ago

BAM Nuttall fined £2.3m after worker drowned

Court hears how series of safety failures led to tragedy
4 days ago

OCU buys Scottish civils contractor RJ McLeod

Deal takes multi-utility infrastructure specialist revenue to over £800m
4 days ago

£220m plan to restore secret wartime tunnels approved

Tunnels under High Holborn to become cultural exhibition space
4 days ago

Galliford Try wins £69m Scottish school job

Deal sealed on Paisley Grammar School project in Renfrewshire
3 days ago

Balfour wins design for £690m Skye transmission job

Main work contract for 137km power line to be awarded later this year
4 days ago

Student and resi developer Fortis goes under

Cheshire based developer follows construction arm into liquidation
4 days ago

Construction output falls for third month running

Heavy rain and strong winds blamed for sharp fall in activity in April
4 days ago

Plan in for Leeds 27-storey block of flats

390 flats planned at former Morgan Sindall office site
4 days ago

Firms readied for £1.5bn Parliament estate upkeep deal

Invitation to tender due to go out next month
5 days ago

Amey switches kit supplier

Deal with HSS was worth £24.5m a year to rental specialist
4 days ago

Track workers scatter to avoid runaway rail trolley

Track trolley careers 1km towards work site
4 days ago

Direct delivery model pays off as Murphy profit soars to £67m

Group operating margin jumps from 3% to 5% in record year
5 days ago

Ex-Galliard boss to lead Battersea next building phase

Don O’Sullivan joins as plans advance to start phase 3C of power station redevelopment
5 days ago

£100m Digbeth 33-storey flats job out to bid

483 flats will be delivered for Clarion housing association
5 days ago

Van Elle fined £233,000 after piling rig kills driver

Court hears how tragedy was caused by poorly maintained plant
5 days ago

Renew buys utilities contractor Excalon

Infrastructure giant expand into electricity transmission market with £26m deal
5 days ago

Planning for new homes plunges to record low

Home builders call for urgent action from incoming government
5 days ago

JTRE starts £400m 21-floor London tower scheme

Office block and 64 affordable homes to be built at 220 Blackfriars Road site
6 days ago

R G Carter construction profits up despite 24% revenue fall

Selective client choice help profit jump to £6m from £1m previously
6 days ago

Contractor services