Carillion directors’ “greed on stilts” laid bare in MPs report

MPs investigating the collapse of Carillion have accused the company’s Board of being “focused on their own pay packets” at the expense of its perilous financial situation as it emerged that the firm had set out “highly restricted circumstances” in which bonuses could be clawed back from directors.

Papers published jointly today by the work and pensions and business, energy & industrial strategy (BEIS) committees appear to strongly reinforce the analysis by 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”.

According to the committees’ report, there was little mechanism in place to claw back the lucrative bonuses paid out to Carillion directors which were based on financial results that have since been revealed to be not as substantial as previously claimed.

When the RemCo considered clawback in February 2015, they explicitly ruled out extending it beyond a handful of directors, as “a more conservative trading practice around contracts … would have a detrimental impact on performance”.



Alison Horner, Carillion’s RemCo chair, told the committees that they took legal and remuneration advice but the company’s remuneration advisors, Deloitte, denied that they ever provided such advice.

After the company’s first profit warning in July last year, Board members looked again at the clawback conditions for directors.

It agreed to extend them to include instances such as serious reputational damage and failures of risk management. However, the select committee said it had “seen no evidence that the remuneration committee sought to enforce these, despite the dire state of the company’s finances”.

The RemCo did at one point consider asking directors to return their bonuses from 2016, but the weak and restricted terms they had already agreed made this impossible, the committees added.



The committees have also seen no evidence to suggest that any further attempts were made to return cash from bonuses to the business.

Frank Field MP, chair of the work & pensions select committee, said: “It’s greed on stilts, pure and simple.”

Rachel Reeves, chair of the BEIS 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.”


Share icon
Share this article: