Photo by Terry Robinson via Wikimedia Commons
The Institute of Directors has warned that the bumper payouts to the former top executives at Carillion, the collapsed contractor, have placed the reputation of the top bosses of Britain on the line.
This morning, Carillion collapsed into liquidation following the failure of the eleventh-hour talks to save the debt-laden contractor.
The insolvency signified the end to a tumultuous six months that was kicked off when Carillion announced contract write-downs amounting to £845m in July coupled with the exit of Richard Howson, its chief executive. A series of profit warnings followed as some analysts and insiders highlighted that the troubles had been a long time in the making.
Last September, shareholders urged Carillion to claw back the millions of pounds of bonuses that were paid to Howson and Richard Adam, its finance chief.
Roger Barker, the corporate governance head of the Institute of Directors said today: “We are still in the early stages of finding out what went wrong at Carillion. However, it is clear that major providers of public services must be governed in a prudent manner. Today’s outcome suggests that effective governance was lacking at Carillion, and we must now consider if the board and shareholders have exercised appropriate oversight prior to the collapse.
“There are some worrying signs. The relaxation of clawback conditions for executive bonuses in 2016 appears in retrospect to be highly inappropriate. It does no good to the reputation of UK business when top managers appear to benefit in spite of the collapse of the organisations that they are responsible for.”
Barker added: “Going forward, it may be necessary for government to consider how it can better monitor the robustness of governance at key contractors.”