Carillion crisis: Millions paid to former execs “does no good to the reputation of UK business”

Bumper payouts to top former execs at collapsed contractor Carillion have put the reputation of Britain’s top bosses on the line, the Institute of Directors has warned.

Carillion fell into liquidation this morning after eleventh-hour talks failed to save the debt-laden contractor.

The insolvency marked the end to a tumultuous six months, kicked off when Carillion revealed £845m of contract write-downs in July coupled with the exit of chief executive Richard Howson. A string of profit warnings followed as analysts and insiders highlighted troubles had been a long time in the making.

Shareholders last September urged Carillion to claw back millions of pounds of bonuses paid to Howson and finance chief Richard Adam.

Read more: Carilli-on the brink – government talks over giant contractor break down

Today, the Institute of Directors’ corporate governance head Roger Barker said: “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.

He continued: “Going forward, it may be necessary for government to consider how it can better monitor the robustness of governance at key contractors.”

Read more: Carillion’s car crash – the winners and losers