Two parliamentary select committees have strongly condemned Carillion for paying themselves bonuses at the expense of shareholders, workers, and suppliers. The chair of the Work and Pensions Committee, Frank Field MP, has denounced the behaviour of Carillion’s board as:
greed on stilts, pure and simple.
The chair of the Business, Energy and Industrial Strategy (BEIS) select committee, Rachel Reeves MP said:
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 directors concerned only with pay and bonuses
These statements strongly reinforce the criticisms 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.
The BEIS select committee also commented on Carillion’s “notorious reputation” for late payments to suppliers. Reeves said that, while suppliers waited, Carillion directors:
were doing their upmost [sic] to ensure there was no impediment to their receipt of fat pay and bonuses.
Weak clawback provisions
Both parliamentary select committees have criticised the Carillion Remuneration Committee (RemCo) for weak clawback provisions of bonuses and salaries. Alison Horner, chair of RemCo, testified before the committees that Carillion followed legal and remuneration advice. Yet the company’s remuneration advisers, Deloitte, denied that they ever provided such advice.
When RemCo first considered clawback for payments made from February 2015 onwards, it ruled out extending it beyond a handful of directors. Shareholders, including BlackRock, wanted to limit the level of bonuses paid to directors in 2016. Despite shareholder dissatisfaction with Carillion’s remuneration for senior managers, RemCo sought “to increase the maximum annual bonus opportunity” to 150%.
RemCo did consider asking directors to return their bonuses from 2016, but only after the weak provisions and restrictions they had already agreed prevented this. Deloitte’s advice to Carillion on clawback in September 2017 noted that the already weak provisions didn’t allow any of the bonuses paid in cash to be clawed back at all.
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.
Both select committees state that they have not seen any evidence to suggest that any further attempts were made to return cash from bonuses to the business.
Featured image via Wikimedia Commons
We need your help to keep speaking the truth
Every story that you have come to us with; each injustice you have asked us to investigate; every campaign we have fought; each of your unheard voices we amplified; we do this for you. We are making a difference on your behalf.
Our fight is your fight. You’ve supported our collective struggle every time you gave us a like; and every time you shared our work across social media. Now we need you to support us with a monthly donation.
We have published nearly 2,000 articles and over 50 films in 2021. And we want to do this and more in 2022 but we don’t have enough money to go on at this pace. So, if you value our work and want us to continue then please join us and be part of The Canary family.
In return, you get:
* Advert free reading experience
* Quarterly group video call with the Editor-in-Chief
* Behind the scenes monthly e-newsletter
* 20% discount in our shop
Almost all of our spending goes to the people who make The Canary’s content. So your contribution directly supports our writers and enables us to continue to do what we do: speaking truth, powered by you. We have weathered many attempts to shut us down and silence our vital opposition to an increasingly fascist government and right-wing mainstream media.
With your help we can continue:
* Holding political and state power to account
* Advocating for the people the system marginalises
* Being a media outlet that upholds the highest standards
* Campaigning on the issues others won’t
* Putting your lives central to everything we do
We are a drop of truth in an ocean of deceit. But we can’t do this without your support. So please, can you help us continue the fight?