Carillion more worried about bosses' paychecks than saving the business

Carillion was more focused on protecting directors' bonuses than on saving the collapsing business, MPs have found in an inquiry into the contractor's collapse.

The RemCo apparently helped to apply regulations that would make it hard for executives' bonuses to be clawed back in case of an underperformance. Alison Horner, chair of Carillion’s RemCo, told MPs the company had taken legal advice from Deloitte, which in turn denied having provided such guidance.

Remuneration Committee papers from August 2016 suggest that there was flexibility to increase maximum bonus opportunities, despite the company already being dissatisfied with the amounts that executives were being paid.

The company was looking to increase the maximum bonus level to 150% of pay in 2016 but shareholders refused and it was left at 100%.

As the company began to show signs of weak profits, the RemCo had to ensure employees would not flee. Some measures were introduced: Retention bonuses for managers below the director level, salary increases for others and a wage of £750,000 per annum for the interim CEO.

The RemCo also tried to to retrieve the director’s bonuses in order to alleviate some of the problems the company was having but the regulations set in place years earlier made it impossible to claw them back.

Furthermore, Carillion continued to pay former CEO Richard Howson his contractual pay after he had stepped down from the role until the company became insolvent.

Frank Field MP, Chair of the Committee leading the investigation, 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 focused on their own pay packets rather than their obligation to address the company’s deteriorating balance sheets.

"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."