Carillion's board, executives and pay, 1999–2018

analysisCompanies House records Sir Neville Simms as a director of Carillion plc from 28 May 1999 to 11 May 2005, Christopher Girling from 8 November 1999 to 30 April 2007 and John McDonough from 1 January 2001 to 31 December 2011. A published governance case study, a secondary source, describes Simms as Chairman until Philip Rogerson replaced him in May 2005, Girling as Finance Director from 1999 until he retired in April 2007 and was replaced by Richard Adam, and McDonough and Girling as Chief Executive and Finance Director at the time of the Mowlem acquisition; the study spells the names 'Sims' and 'Molem', and the retained official records show Simms only as a director, not as Chairman. Carillion's 2014 annual report states that Rogerson had been Chairman since May 2005. Companies House records Rogerson's directorship from 1 October 2004 to 7 May 2014, and the annual report states that he stood down after the 2014 annual general meeting, giving 7 May as the date of his resignation as Non-Executive Chairman. ^{1 2 3}

analysisRichard Adam was Group Finance Director and a board member from 2 April 2007 until he retired on 31 December 2016, according to the 2014 and 2016 annual reports and Companies House; the Financial Conduct Authority (FCA) gives April 2007 to 31 December 2016. In a letter of 20 February 2018 to the House of Commons committees Adam stated that the company announced his retirement on 24 August 2016 and that he resigned most of his subsidiary directorships on 31 October 2016; the 2016 annual report says he retired after nine years with Carillion. McDonough's last years as Chief Executive appear in the 2014 remuneration report, which records his base salary as £632,000 and his single total figure of remuneration as £1,666 thousand for 2009, £1,512 thousand for 2010 and £1,719 thousand for 2011. Richard Howson, who according to the committees had been at the company since its formation in 1999, took over from McDonough as Chief Executive on 1 January 2012. The annual reports describe Howson as a Fellow of the Institution of Civil Engineers with 19 years' service with Carillion (2014 report) and 22 years (2016 report), whose past roles at Carillion plc were Chief Operating Officer, Executive Director responsible for UK Construction and Middle East and North Africa, and Managing Director, Middle East and North Africa. Adam's successor from 1 January 2017, after what the 2016 annual report calls a rigorous selection process involving external and internal candidates, was Zafar Khan, previously Carillion's Group Financial Controller and before that Finance Director of Al Futtaim Carillion, the group's joint venture in the United Arab Emirates; Khan's biography also lists Finance Director, Middle East and North Africa, at Carillion plc, Chief Financial Officer of Associated British Ports Holdings Limited and senior financial roles with BBA Group plc and Flag Telecom Holdings Limited. Khan's employment was terminated with effect from 8 September 2017, according to Khan's letter to the committees; Companies House records his resignation as a director on 11 September 2017, and the FCA gives his tenure as 1 January 2017 to September 2017. ^{4 5 3 6 2 7 1 8}

analysisPhilip Green joined the board on 1 June 2011, according to the 2014 and 2016 annual reports and Companies House. The committees state that he joined as Senior Independent Non-Executive Director, and the 2014 annual report describes him as having been Senior Independent Non-Executive Director and Chairman designate before he became Chairman in 2014. On appointment as Chairman Green received a fee of £193,000 pro rata from 7 May 2014, the date of Rogerson's resignation, according to the 2014 remuneration report; he is named Chairman in the 2016 annual report and the January 2018 group business plan, and the committees' report states that he was Chairman from 2014 until the company was placed into compulsory liquidation on 15 January 2018. The committees also noted that Carillion's Chairman, named in its annual reports as Philip Green CBE and at Companies House as Philip Nevill Green, is not to be confused with Sir Philip Green of Arcadia and, previously, BHS. ^{6 3 4 2 9 10 11}

analysisAt 31 December 2014, Carillion's 2014 annual report states, the board comprised two executive and five non-executive directors: Green (Chairman), Steve Mogford (Senior Independent Non-Executive Director), Andrew Dougal, Alison Horner and Ceri Powell, with Howson as Group Chief Executive and Adam as Group Finance Director. During 2014 Vanda Murray, a non-executive director since 2005 who chaired the Remuneration Committee, retired after almost nine years, resigning on 7 May (Companies House records her directorship from 1 June 2005 to 7 May 2014), and Horner, an independent non-executive director since 1 December 2013 and a member of the Audit Committee from that date, succeeded Murray as Remuneration Committee chair in May 2014; Horner also sat on the Nominations, Business Integrity and Sustainability Committees. The committees describe Horner as a non-executive director from December 2013 until the company's collapse and note that, apart from Green, she was the only proposed member of the new board whose appointment pre-dated the July 2017 profit warning. Powell joined as an independent non-executive director on 2 April 2014. Mogford, a non-executive director since September 2006 (5 September in the 2014 annual report, 6 September at Companies House), was appointed Senior Independent Non-Executive Director after Green became Chairman and sat on all five board committees; Mogford held no Carillion shares at 31 December 2014, and his fees were £57 thousand for 2014 and £60 thousand for 2015. Because Mogford would have served nine years in September 2015, the 2014 report said he would retire in 2015 to keep within the Code's independence requirements for non-executive directors; Companies House records his resignation on 31 December 2015. ^{1 2 3 4 5}

analysisCarillion's 2016 annual report, whose chairman's statement is dated 1 March 2017, lists five non-executive directors - Green (Chairman), Keith Cochrane (Senior Independent Non-Executive Director), Dougal, Horner and Powell - and two executive directors, Howson (Group Chief Executive) and Zafar Khan (Group Finance Director), with Richard Tapp as Secretary and the registered office at Carillion House, 84 Salop Street, Wolverhampton; the committees' May 2018 report names the same five as the non-executive directors in place at the end of 2016. Cochrane had joined as Senior Independent Non-Executive Director on 2 July 2015, the date given in the annual report and its Audit and Remuneration Committee tables and recorded by Companies House, and consistent with the part-year fee of £28 thousand the report shows for him in 2015; the committees' report, which cites the same annual report, gives 2 July 2016 instead, and the register and annual-report date is used here. In 2016 Green chaired the Nominations and Business Integrity Committees, Powell the Sustainability Committee, Dougal the Audit Committee and Horner the Remuneration Committee. The Audit Committee comprised Dougal (its chairman, a member since 3 October 2011, the date he joined the board as an independent non-executive director), Cochrane (from 2 July 2015), Horner (from 1 December 2013) and Powell (from 2 April 2014), and the Remuneration Committee consisted of the independent non-executive directors Horner, Powell, Dougal and Cochrane; Dougal also sat on the Nominations, Business Integrity and Sustainability Committees. ^{4 3 5 2 1 6 7}

analysisSustainability had its own board committee from 2015. The 2014 annual report states that Howson, as Chief Executive, was responsible to the board for sustainability, that Chief Sustainability Officer David Picton was accountable for it across the group, and that a Board Sustainability Committee chaired by Dr Ceri Powell had been created to operate from the beginning of 2015. Powell, a member of all five board committees, was Executive Vice President for Exploration at Royal Dutch Shell (Global Exploration in the 2016 report), after serving there as Vice President Strategy and Regional Vice President Exploration (Middle East, Caspian and South Asia). Because Shell was a customer of, and supplier to, the group, the 2014 report recorded that Powell had not been and was not expected to be involved in any commercial dealings between the group and Shell, and that the board therefore considered the Chairman and each non-executive director independent under the UK Corporate Governance Code. On 19 January 2017 Carillion announced that Powell would stand down on 31 March 2017 owing to an international relocation to become Managing Director of Brunei Shell Petroleum; Companies House records the resignation on that date, and the 2016 annual report thanks Powell particularly for chairing the Sustainability Committee. ^{1 4 2}

analysisWhen Green was appointed Chairman, the committees noted, he was also Chairman of BakerCorp and Chairman Designate of Williams and Glyn Bank Limited and had previously been Chairman of Clarkson plc. The 2014 annual report lists his external appointments as Non-Executive Chairman of BakerCorp, Senior Independent Director of Saga plc, Chairman Designate of Williams & Glyn Bank Limited and Chairman of Sentebale, a charity focused on Lesotho, and records that in 2014 he stood down as Chairman and a director of Clarkson plc on 9 May and was appointed a director of Saga plc on 29 May. The 2016 report lists Non-Executive Chairman of BakerCorp Inc (USA) and of Corsair Infrastructure Management (USA), Chairman of Sentebale, founder of the charity Hope Through Action and Advisor to the Prime Minister on Corporate Responsibility; according to the committees Green was appointed to that advisory role in 2011 and left it in 2016, and an online encyclopedia entry states that he chaired BakerCorp from June 2011 until December 2017. Both reports list his past roles as Chief Executive of United Utilities Group PLC, Chief Executive of Royal P&O Nedlloyd, Director and Chief Operating Officer of Reuters Group PLC and Chief Operating Officer of DHL Europe and Africa. The encyclopedia entry dates the United Utilities post to 2006-2011, with Steve Mogford as successor, and Carillion's 2014 report states that Mogford joined United Utilities Group PLC as Chief Executive in March 2011. ^{1 2 3 4 5}

analysisThe committees also recorded, citing a January 2018 press report, that Green had been Managing Director of Coloroll before it went into receivership in June 1990 and that in 1994 the Pensions Ombudsman made a finding of breach of trust and maladministration against him. The Ombudsman's determination itself is not among the retained documents. An online encyclopedia entry states that Green became Coloroll's group development director in 1985 and was its managing director from 1989 to 1990, and that the 1994 finding concerned him as a trustee of the Coloroll group's pension fund. Asked by the committees, the chair of Carillion's pension Trustee wrote on 26 January 2018 that the Trustee had not been aware of the Pensions Ombudsman ruling against Green. No response by Green on this point was found in the retained documents. ^{2 5 6 3}

analysisThe 2014 annual report states that Howson held no external appointments; the 2016 report lists Chairman of the Community Leadership Team of Business in the Community (BITC), Chairman of the CBI's Construction Council and Non-Executive Director of John Wood Group PLC, and states that Howson retained the fee of £35,374 paid in 2016 for the Wood Group role. Adam, according to the 2014 report a chartered accountant who qualified with KPMG in 1982, had been Group Finance Director of Associated British Ports Holdings plc, Hodder Headline Plc and TVS Entertainment plc and a non-executive director and audit committee chairman of SSL International plc. In 2014, after discussion and agreement with the Chairman, Adam became a Non-Executive Director of Countrywide PLC, where he chaired the Audit and Risk Committee. The remuneration reports state that Adam retained fees of £12,249 and £30,885 paid in 2014 as a non-executive director of Wincanton plc, whose board he left in September 2014, and of Countrywide PLC respectively, and fees of £55,000 each paid in 2016 for non-executive roles at Countryside Properties Plc and Countrywide PLC. ^{4 1}

analysisAccording to the 2014 annual report, Mogford was Chief Executive of United Utilities Group PLC, which he joined in March 2011, and had been Chief Executive of Selex Galileo (part of Finmeccanica, Italy) and Chief Operating Officer and a director of BAE Systems plc. The 2016 report lists Cochrane as UK Government Lead Non-Executive Director for the Scotland Office and the Office of the Advocate General, with past roles as Chief Executive of The Weir Group PLC, Chief Executive and Finance Director of Stagecoach Group PLC and Director of Group Finance of ScottishPower PLC. Horner was Group Personnel Director and a member of the Executive Committee of Tesco Plc and a Trustee of the Tesco Pension Scheme in 2014, previously Operations Director at Tesco and a non-executive director of Tesco Bank, and Chief People Officer and Executive Committee member in 2016; the committees describe her as Tesco's Chief People Officer with responsibilities for over 500,000 staff, and Companies House records Horner as a director of Tesco Pension Trustees Limited from 29 March 2012 to 1 June 2018. Dougal, formerly Group Finance Director and Chief Executive of Hanson plc, non-executive director and audit committee chairman of Taylor Wimpey plc and Taylor Woodrow plc and a non-executive director and audit committee member of BPB Plc, was in 2014 Senior Independent Non-Executive Director and Audit Committee Chair of Creston plc, a non-executive director of Premier Farnell plc and, from 1 March 2015, of Victrex plc, and a member of the Council and the Oversight Board of the Institute of Chartered Accountants of Scotland. The 2016 report lists Dougal as Non-Executive Director and Audit Committee Chair of Victrex plc and a member of the Institute's Council, with Creston plc and Premier Farnell Plc among past roles; that biography is printed in three interleaved columns, and the attribution of these entries to Dougal follows the column layout. ^{1 4 2 7 3}

analysisAccording to the committees, Carillion was governed by a seven-member board, which immediately before the July 2017 profit warning consisted of Howson (Chief Executive), Khan (Finance Director), Green (non-executive Chairman) and the non-executive directors Cochrane, Dougal, Horner and Baroness Morgan of Huyton; by the collapse Howson and Khan were no longer in post, replaced respectively by Cochrane and Emma Mercer, and the committees note that Mercer did not join Carillion plc's board. Howson, a director since 10 December 2009 and Group Chief Executive from 1 January 2012, was removed on 10 July 2017, when the company issued its profit warning; the FCA gives the same tenure, and Companies House records his directorship as ending on 10 July 2017. According to the committees, Howson stayed on in a lesser role, with responsibilities for collecting cash on key contracts and boosting morale in the UK construction business, before leaving in September 2017, and continued to receive his full contractual salary until the company entered liquidation. The board asked Cochrane, already a board member, to take the Chief Executive role on an interim basis. FTI Consulting's January 2018 'Project Ray' review for the lenders and the January 2018 group business plan describe Cochrane as Interim Chief Executive, and the National Audit Office interviewed him as the Chief Executive in post at the time of the insolvency. ^{1 2 3 4 5 6 7 8 9}

analysisKhan left less than two months after the warning, and the accounts of why differ. In a letter of 21 February 2018 to the committees, Khan stated that after the 10 July 2017 trading update he reported to the board, typically weekly, the last such report being an oral update on a Sunday-evening conference call on 3 September 2017 on worsening net debt and profit trends; that Cochrane told him shortly afterwards that the update had 'spooked' the board; and that his understanding was that this update, together with the poor financial performance he had been reporting since 10 July 2017, led to the termination of his contract shortly afterwards. Khan wrote that he did not understand why the update would have spooked the board, as the difficulties with net debt and profit should already have been apparent to it. This is Khan's own account; he stated that he holds no written record of the 3 September update and does not know whether minutes were made, and none is among the retained documents. The board's stated view differs: Green told the committees that the board concluded collectively that Khan was 'not close enough to the underlying business unit numbers' and not the 'right person' to participate in negotiations with the company's banks, and the committees stated that their evidence supported the board's view. Carillion terminated Khan's employment with effect from 8 September 2017. According to his letter, Khan did not enter into the draft settlement agreement Carillion then sent him, under which he would, among other things, have released Carillion from his claims and kept the circumstances leading to the termination entirely confidential. ^{10 1 2}

analysisEmma Mercer replaced Khan as Group Finance Director in September 2017 and remained in post until the collapse, according to the committees. They record that Mercer had returned to the UK in April 2017 after three years in the Canadian part of the business; a published governance case study states that the return was to become Finance Director of Construction Services. The January 2018 group business plan lists Mercer as CFO on the Group Executive, appointed in September 2017, and FTI Consulting's review states that she assumed the role 'although not a board director'. The National Audit Office nevertheless refers to Mercer and Cochrane as 'former Carillion directors in post' at the insolvency, and interviewed Mercer as the Finance Director in post at that time. Mercer held no directorship of Carillion plc, though Companies House records her as a director of the subsidiary Carillion (AMBS) Limited from 8 December 2011 to 10 January 2014 and again from 12 December 2017 to 1 June 2018. ^{1 7 9 8 11 2 12}

analysisCarillion's January 2018 group business plan presents the board as Green (Chairman), Sally Morgan (Senior Independent Director), Cochrane (Interim Chief Executive), Dougal (Audit Committee chair), Alan Lovell and Horner (non-executive directors) and Justin Read (Audit Committee chair designate). It describes the board as refreshed with four appointments since July - Andrew Davies as Chief Executive, Morgan, Lovell and Read - and states that Cochrane and Dougal would step down during 2018; Dougal wrote in April 2018 that Read was replacing him as Audit Committee chair. Companies House records Morgan's appointment as a director on 1 July 2017, Lovell's on 1 November 2017 and Read's on 1 December 2017. FTI Consulting's review states that Lovell was appointed at the request of the creditors to strengthen the board's restructuring experience. The plan describes Morgan as a non-executive director of Countryside Properties plc, a former non-executive director of Dixons Carphone plc and, in 2001-05, director of government relations at 10 Downing Street; Lovell as Chairman of the Consumer Council for Water and a former chief executive of Infinis, Costain Group and Jarvis plc with extensive restructuring experience; and Read as a non-executive director of Ibstock plc and Grainger plc, Chairman of Segro Pension Scheme Trustees Limited and formerly Group Finance Director of Segro (2011-16) and of Speedy Hire (2008-11). The plan prints these profiles in interleaved columns, and the attribution of each entry to a person follows the column layout. ^{1 2 3 4 5 6}

analysisThe permanent Chief Executive was due to start only after the collapse. According to the committees, Carillion appointed a permanent successor from outside the company in October 2017, whose start date was brought forward to 22 January 2018; by then the company had been placed into compulsory liquidation on 15 January 2018. FTI Consulting's review and the business plan name him as Andrew Davies, Chief Executive of Wates Group and a non-executive director of Chemring plc and Flowgroup plc, announced as the group's future Chief Executive and due to join on 22 January. The retained documents do not show Davies taking office, and the Companies House officer list for Carillion plc contains no appointment for him; the attribution of the Wates, Chemring and Flowgroup entries to Davies follows the interleaved column layout of the plan's profiles. ^{2 5 1 7 3 4}

analysisThe Companies House officer list for Carillion plc records 32 officer appointments, 25 of them with resignations, and all 32 entries are present in the retained copy. The seven shown as active are the directorships of Cochrane (appointed 2 July 2015), Dougal (3 October 2011), Green (1 June 2011), Horner (1 December 2013), Lovell (1 November 2017), Baroness Sally Morgan (1 July 2017) and Read (1 December 2017). Green appears twice: as the active directorship from 1 June 2011 and as a second director entry with appointment and resignation both dated 1 June 2011. None of the entries is for Emma Mercer or Andrew Davies, consistent with the committees' statement that Mercer did not join the board. ^{3 2}

analysisBelow the board, the January 2018 plan presents a smaller Group Executive under the Interim Chief Executive: Andy Jones, Chief Operating Officer from 1 October 2017, latterly President and CEO of Carillion Canada and with Carillion since 2001; Emma Mercer, CFO, appointed September 2017; Janet Dawson, Chief HR Officer, appointed in 2013; Richard Tapp, Legal and Company Secretary, in the role since 2002 and previously Company Secretary and Group Legal Adviser at Blue Circle Industries plc; Lee Watson, Chief Transformation Officer, appointed September 2017, an EY partner since 2008 on secondment; and Donald Muir, Head of Business Improvement from November 2017. The plan describes the Chief Transformation Officer and Head of Business Improvement posts as temporary; it prints the executive profiles in interleaved columns, and the attribution of each entry follows the column layout. FTI Consulting's review also records Jones's appointment as COO, and the 2016 annual report names Dawson as Group HR Director and Tapp as Secretary. Companies House records Tapp's appointment as secretary of Carillion plc on 1 December 2001 and his resignation on 25 June 2018. EY told the committees that Watson was seconded as Chief Transformation Officer, reporting to the Chief Executive Keith Cochrane, and attended some board meetings in that capacity to provide updates on restructuring activity, but was not a director of Carillion or a member of its board. FTI records that Carillion retained EY to support the development of the business plan, working capital, liquidity and cost reduction, and the committees state that EY was appointed on 14 July 2017 to support a strategic review of the company. ^{1 5 8 2 3 4}

analysisThe plan lists five new divisional Managing Directors in role from October 2017: Mark Davies (Infrastructure; previously MD of Carillion Infrastructure), Richard Lumby (Central Government; leading Carillion's defence and security portfolio since 2002), Daniel Easthope (Corporate & Regions; MD from 2013 of CarillionAmey, the joint venture maintaining most of the UK defence estate), Khalid Nawaz (Building; previously Finance Director for the Middle East and Carillion telent) and Simon Buttery (International; latterly MD of the Middle East & North Africa business, previously President & Chief Executive of Carillion Canada). Under the new structure the Managing Directors no longer sat on the Group Executive but continued to report to the Chief Executive. In his written response to the committees' report, Howson stated that 4 out of the 5 existing experienced divisional managing directors were removed from their roles in the last months before the liquidation. ^{1 4 2}

analysisHowson started as Chief Executive on a lower salary than his predecessor. Carillion's 2014 remuneration report states that Howson's base salary was set at £560,000 on his appointment on 1 January 2012, below the £632,000 paid to John McDonough, and was raised by 9% to £610,400 from 1 January 2015, with a further 8% increase to £660,000 intended from 1 January 2016, subject to continued strong business and personal performance. The 2016 report confirms a base salary of £660,000 for 2016, unchanged for 2017, and an 8% rise in Howson's salary and fees between 2015 and 2016 against 2% for UK employees. The House of Commons committees attribute the rises to benchmarking commissioned from Deloitte in 2015 but give them in the opposite order, as 8% in 2015 and 9% in 2016. ^{1 2 3 4}

analysisFor 2014 the remuneration report gives a single total figure of £1,024 thousand for Howson (salary £560 thousand, benefits £20 thousand, bonus £246 thousand, pension £198 thousand) and £818 thousand for Adam (salary £450 thousand, benefits £21 thousand, bonus £203 thousand, pension £144 thousand), with no long-term incentive vesting. Its table of Chief Executive pay gives Howson's single figure as £791 thousand for 2012, £1,034 thousand for 2013 and £1,024 thousand for 2014, with annual bonuses of 36% (2013) and 44% (2014) of the maximum opportunity. For 2016 the report gives £1,510 thousand for Howson (salary £660 thousand, benefits £28 thousand, bonus £245 thousand, long-term incentives £346 thousand, pension £231 thousand) and £1,060 thousand for Adam, against £1,283 thousand and £971 thousand for 2015, and total directors' remuneration of £3,029 thousand. Howson's 2016 bonus was 37.125% of salary, with no amount earned on the earnings-per-share and cash-conversion targets; the committees state that Howson received a bonus of £245,000 (37% of salary) despite meeting none of his financial performance targets. ^{1 3 2 4}

analysisNon-executive fees totalled £451 thousand in 2014, including £147 thousand for Green, £68 thousand for Rogerson, £61 thousand for Horner, £60 thousand for Dougal, £57 thousand for Mogford, £37 thousand for Powell and £21 thousand for Murray. In 2016 Green's fee was £215 thousand (2015: £193 thousand) and Dougal, Horner, Powell and Cochrane each received £61 thousand. The 2016 remuneration report shows a Chairman's fee of £215,000 for 2016 and 2017 and a basic non-executive fee of £51,000, with an additional £10,500 each for chairing the Remuneration, Audit or Sustainability Committee and for the Senior Independent Non-Executive Director; the Chairman received no additional fee for committee memberships. According to the committees, Green was awarded a 10% increase in his fees as Chairman in 2016, from £193,000 to £215,000, based on benchmarking, while Carillion's wider comparable workforce received a 2% pay rise. ^{1 3 2 4}

analysisAccording to the committees, Carillion's senior leaders could earn an annual bonus of up to 100% of basic pay, split evenly between financial and other objectives. In December 2016 the Remuneration Committee told shareholders it intended to raise the maximum to 150% of salary, but it abandoned the plan in March 2017 after investors such as BlackRock protested in private, and around 20% of investors voted against the remuneration report at the 2017 annual general meeting; the 2016 annual report records 81% of votes for and 19% against the remuneration report at the 2016 meeting. The committee had agreed in February 2015 a clawback policy allowing bonuses to be recovered if the accounts needed to be restated or a director was guilty of gross misconduct, with the committee as arbiter, and the 2016 remuneration report described a clawback provision giving it the right to recover all elements of bonus and a malus provision allowing unvested deferred bonus awards to be reduced in circumstances of corporate failure. In September 2017, as part of its search for a new Chief Executive, the committee agreed new clawback triggers recommended by Deloitte, including reputational damage, failures of risk management and errors in performance assessments, and considered asking directors to return their 2016 bonuses, but concluded, the committees report, that this 'could not be enforced and would be very difficult to achieve at this stage'. ^{3 2 4}

analysisAccording to the committees, Remuneration Committee papers dated 9 July 2017, the day before the first profit warning, show that the committee, chaired by Horner since May 2014, agreed to offer retention payments to five senior employees to remain with the company until 30 June 2018, and salary increases of between 25 and 30% 'in the light of the very considerable burden likely to fall on certain roles'. The committees also cite Remuneration Committee minutes of 23 October 2017 recording a decision to pay the new interim Chief Executive Keith Cochrane, a former member of the committee, a fee of £750,000 for the role, which they describe as notably higher than his predecessor's basic pay. ^{3 4}

analysisAccording to the committees, Carillion's former directors, though most were shareholders, were not members of the company's defined benefit pension schemes but received employer contributions to a defined contribution scheme; for 2016 Howson and Adam received £231,000 and £163,000 respectively, matching the pension column of the 2016 remuneration report. That report states that Howson received pension contributions and supplements of 40 per cent of salary up to a cap of £132,700 and 33.6 per cent above it, and Khan 20 per cent up to the cap and 25 per cent above it. The committees' general statement does not mention that Carillion's 2014 remuneration report showed Howson as a deferred member of a defined benefit scheme closed to future accrual in April 2009, with an accrued pension of £27,557 at 31 December 2014. ^{1 2 3 4}

analysisAdam's 2016 single figure of £1,060 thousand (salary £460 thousand, benefits £19 thousand, bonus £140 thousand, long-term incentives £278 thousand, pension £163 thousand) excluded a payment in lieu of notice of £135,939 for 1 January to 24 February 2017; the committees describe a final pay package of £1.1 million in December 2016. The 2016 remuneration report states that Adam's 2016 bonus was paid fully in cash, that Adam received salary, pension supplement and car allowance for the notice period, that the deferred bonus shares for 2013 to 2015 were released on departure, and that the outstanding 2014 to 2016 LEAP awards would vest on the normal dates, pro rata and subject to performance conditions. Khan's package from 1 January 2017 was set at a base salary of £425,000, an annual bonus opportunity of up to 100 per cent of salary, a LEAP award of 150 per cent of salary, employer pension contributions of 20 per cent of salary up to the £132,700 cap with a 25 per cent cash supplement above it, and a company car allowance of £14,500. Khan told the committees that his service contract provided for 12 months' notice; that after the termination with effect from 8 September 2017 Carillion was contractually obliged to make 12 monthly payments of salary, car allowance and pension until August 2018, of which he received four (September to December 2017) before payments stopped because of the liquidation. ^{1 3 4 5}

analysisCarillion's remuneration reports record the directors' shareholdings in Carillion plc owned outright. At 31 December 2014 Adam held 119,274 shares, Howson 121,789, Green 10,000 and Dougal 5,000, with none held by Horner, Mogford or Powell. At 31 December 2016 Howson held 137,487, Adam 122,014, Khan 1,368, Green 10,000, Dougal 5,000 and Horner 3,000, with none held by Cochrane or Powell; the executive directors also held unvested LEAP awards and deferred bonus shares. The committees' report also notes Dougal's 5,000 shares. ^{2 1 3 4}

analysisAdam set out what happened to his shares in the letter of 20 February 2018. On retirement on 31 December 2016 Adam held 122,014 Carillion shares, and 93,472 deferred bonus shares (from the 2013, 2014 and 2015 bonus schemes) and 38,594 shares from the 2013 LEAP award vested on or around that date; all of these were sold through Carillion's broker at £2.100467 per share on 1 March 2017. The 112,416 shares from the 2014 LEAP award vested on 8 May 2017 and were sold that day at £2.1548 per share; Carillion's 2016 annual report shows 112,417 shares vesting from that award, one more than the letter. A further 450,144 shares from the 2015 and 2016 LEAP awards would be forfeited because of the collapse. Adam stated that all sales other than the 122,014-share holding were subject to a 47% tax and national insurance deduction by Carillion, and that the sales took place on those dates because they were the days on which the company invited him to sell. The committees put the total at £776,000 between March and May 2017, at an average price of 212p, and note that the share price fell to 57p by mid-July 2017. ^{1 6 3 4}

analysisThe House of Commons committees' May 2018 report concluded that Green 'appears to have interpreted his role as Chairman as that of cheerleader-in-chief' and that 'as leader of the board he was both responsible and culpable'; these are conclusions of a parliamentary inquiry, not findings of a court or regulator. In evidence Green had accepted, as Chairman, 'full and complete' responsibility for the collapse, but said he did 'not necessarily' accept culpability. In a written response to the report, Green said he had a significant number of comments on it and disagreed with many of its conclusions, but that it would not be appropriate to comment while the investigations by the Insolvency Service (assisted by PwC as Special Manager), the FCA and the Financial Reporting Council (FRC) were ongoing, and that he would continue to cooperate fully with them. An online encyclopedia article states that in January 2021 the Insolvency Service said it would seek to ban eight former Carillion directors, including Green, and that the trial due to start on 16 October 2023 was cancelled after the Insolvency Service decided it was not in the public interest to pursue him and other directors; a written parliamentary answer of 24 October 2023 confirms that disqualification proceedings begun on 12 January 2021 against five non-executive directors of Carillion plc were dropped in October 2023, without naming them. ^{1 2 3 4}

analysisOf the non-executive directors as a group, the committees concluded that they 'were, however, unable to provide any remotely convincing evidence of their effective impact', again a parliamentary conclusion rather than a finding of a court or regulator. In evidence Horner had said 'we were there to provide oversight and challenge, and we were able to do that effectively', and Green 'we challenged; we probed; we asked'. The committees quote Dougal, the audit committee chair, as noting in the 2017 'lessons learned' exercise an apparent 'push for cash at period end', which would reflect well in published results, and 'inadequate reviews on operational contracts'; they refer to a July 2017 lessons-learned pack and cite unpublished minutes of a board meeting of 7 June 2017, which are not among the retained documents. Answering their question, which quoted the minutes of the lessons-learned session, Dougal wrote on 5 April 2018 that his further remark about 'perhaps also a hold back of bad news' referred to the Royal Liverpool University Hospital contract, and in the same letter described the board's culture as 'engaged, honest and collaborative'. In written responses to the report, Green and Dougal each said they disagreed with many of its conclusions, and Horner said it misquoted or misrepresented her evidence in a number of instances; each said it would not be appropriate or right to comment further while the investigations into Carillion's insolvency were ongoing. Disqualification proceedings that the Insolvency Service began on 12 January 2021 against five non-executive directors of Carillion plc, alongside three executive directors, were dropped in October 2023 (written parliamentary answer of 24 October 2023); the official records do not name the five. A legal briefing of 20 October 2023 by the non-executive directors' lawyers states that the proceedings were discontinued on the eve of a trial due to start on 16 October 2023 and that neither the FCA nor the FRC brought action against any of the non-executive directors. ^{1 4 5 3 6}

analysisOn pay, the committees concluded that the Remuneration Committee 'was responsible for a policy of short-term largesse' and that Horner, a non-executive director and its chair for four years, 'presided over growing salaries and bonuses at the top of the company as its performance faltered'; they said the clawback terms agreed in 2015 were so narrow they ruled out any bonus being returned. These are conclusions of a parliamentary inquiry, not findings of a court or regulator. Horner denied that the terms were overly restrictive, telling the committees they made it easier to claw back bonuses and that misstatement and misconduct were used as clawback terms by '80% of the FTSE'. In oral evidence, as the committees record, she sought to justify her approach by pointing to industry standards, the guidance of advisers and conversations with shareholders, and said she was 'sorry for what has happened'. In her written response Horner said that in a number of instances the report misquoted or misrepresented the evidence she gave, but that given the ongoing investigations into Carillion's insolvency it would not be right to comment generally on the report at that time. ^{4 1}

analysisThe committees concluded that Howson, Chief Executive from 2012 until July 2017, 'was the figurehead for a business model that was doomed to fail' and should accept that, as the longstanding leader who took Carillion to the brink, he 'was part of the problem rather than part of the solution'; these are conclusions of a parliamentary inquiry, not findings of a court or regulator. In oral evidence, as the committees record, Howson had said that 'but for a few very challenging contracts, predominantly in the Oman and one in Qatar, I believe Carillion would have survived', and that the business was in a sustainable position when he was removed. In his written response, Howson said the report had not considered all the issues key to understanding why Carillion went into liquidation and had omitted or ignored some of the more significant evidence; he accepted that debt was too high but said he had been committed to working through the challenging contracts and reducing it, and argued that the final months before the liquidation, when 4 out of the 5 experienced divisional managing directors were removed from their roles, had not been examined. Following an initial Decision Notice dated 24 June 2022, the FCA fined Howson £237,700 (press release first published 16 February 2026) after he withdrew his challenge to its decision; it found that in the period 1 July 2016 to 10 July 2017 he acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules. On 4 October 2023 the Insolvency Service announced that it had accepted an 8-year disqualification undertaking from Howson for his conduct as a director of Carillion plc; a legal briefing by the non-executive directors' lawyers states that none of the three executives' undertakings involved any admission as to the alleged fraud or any direct knowledge of or involvement in preparing incorrect accounts. ^{1 4 7 8 6}

analysisThe committees concluded that Adam, Finance Director between 2007 and 2016, 'was the architect of Carillion's aggressive accounting policies' and would, more than anyone else, have been aware of the unsustainability of the company's approach; that his voluntary departure at the end of 2016 was 'perfectly timed'; and that he then sold all his shares for £776,000 'just before the wheels began very publicly coming off'. They quote Dougal as saying that Adam 'exercised tight control over the entire finance function' and 'was defensive in relation to some challenges in board meetings'. These are conclusions of a parliamentary inquiry, which Adam disputed, not findings of a court or regulator. In oral evidence Adam had said that in his view he left the company in December 2016 in a healthy state. In the letter of 20 February 2018 he said he sold his shares on the dates the company invited him to, and that after retiring he had very minimal contact with some former colleagues and provided no advice in any capacity; he speculated that the size of the provision announced on 10 July 2017, together with the exit from markets in the Middle East and Canada, brought capital market, customer and supplier concern that the company could not allay. In a written response to the committees' letter of 22 May 2018, Adam said the report and subsequent media appearances blamed him and others for the collapse, that he did not believe the evidence justified the committees' conclusions, that their assumptions were unwarranted in respect of his role before his retirement in 2016, and that he was participating in ongoing regulatory investigations. Following an initial Decision Notice dated 24 June 2022, the FCA fined Adam £232,800 (press release first published 7 January 2026) after he withdrew his challenge to its decision, finding that he acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules; the FCA and FRC announcements concern Carillion's market announcements and financial reporting and do not mention the share sales. The Insolvency Service accepted a disqualification undertaking from Adam on 13 July 2023; according to the non-executive directors' lawyers, none of the three executives' undertakings involved any admission as to the alleged fraud or any direct knowledge of or involvement in preparing incorrect accounts. On 12 May 2026 the FRC announced settled sanctions under which Adam accepted misconduct, admitting acting recklessly and failing to act with integrity, with a recommended 15-year exclusion from the ICAEW, a financial sanction of £550,000 reduced to £222,019 and a severe reprimand; the FRC made no finding, and Adam made no admission, that he acted dishonestly or deliberately. ^{4 1 9 10 8 11 6}

analysisThe committees also reported how Adam was seen in the pension funding negotiations: as Finance Director he argued that the company could not afford the contributions sought, the trustee's adviser Gazelle concluded that Adam had an 'aversion to pension scheme deficit repair funding', and Robin Ellison, Chair of the Trustee, observed at the time that Adam viewed funding the pension schemes as a 'waste of money'. They quote the scheme actuary as saying that Carillion's 'primary objective was to minimise the cash payments to the schemes', and report Gazelle's bafflement at how Adam 'managed to persuade the Pensions Regulator not to press for a better recovery plan'. These are characterisations from the trustee's adviser, the scheme actuary and the trustee chair, not findings of a court or regulator, and the committees record that the directors rejected accusations that they did not care about funding the schemes, referring to meeting their obligations under the deficit recovery plan. Adam's written response rejected the report's conclusions about his role generally; no response by Adam addressing these specific remarks was found in the retained documents. On the 2008 purchase of Alfred McAlpine, the committees asked about Adam's evidence that it had added '£650 million of goodwill' while Alfred McAlpine held net liabilities of £50 million; Adam replied in the February 2018 letter that net liabilities of £50.1 million at the date of acquisition and goodwill of £615 million arising on it are set out in note 32 of Carillion's 2008 annual report, and that he believed cost savings of £100 million were achieved. Companies House records the acquired company, now Carillion (AM) Limited, under the name Alfred McAlpine PLC until 12 February 2008, and the 2016 annual report lists Carillion (AM) Limited as a 100% subsidiary. ^{4 1 12 9 13 14}

analysisThe committees concluded that Khan 'failed to get a grip on Carillion's aggressive accounting policies or make any progress in reducing the company's debt' and, although he took on the role when the company was already in deep trouble, 'should not be absolved of responsibility'; he signed off the 2016 accounts, which in their view presented an extraordinarily optimistic view of the company's health, and while he may not have been the architect of those policies, his previous role as group financial controller meant he did not lack experience of how the company operated. These are conclusions of a parliamentary inquiry, not findings of a court or regulator. In the letter of 21 February 2018, Khan said he fully accepted responsibility for his actions as a director of Carillion plc but believed that the level of debt allowed to grow in previous years was the principal contributing factor to Carillion's 2017 difficulties, and that his oral answer that debt had been reduced reflected a misunderstanding of the question, debt having plainly not reduced during 2017. Following an initial Decision Notice dated 24 June 2022, the FCA fined Khan £138,900 (press release first published 7 January 2026) after he withdrew his challenge to its decision, finding that he acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules. The Insolvency Service accepted a disqualification undertaking from Khan on 29 June 2023; according to the non-executive directors' lawyers, none of the three executives' undertakings involved any admission as to the alleged fraud or any direct knowledge of or involvement in preparing incorrect accounts. On 12 May 2026 the FRC announced settled sanctions under which Khan accepted misconduct, admitting acting recklessly and failing to act with integrity, with a recommended 10-year exclusion from the ICAEW, a financial sanction of £225,000 reduced to £60,228 and a severe reprimand; the FRC made no finding, and Khan made no admission, that he acted dishonestly or deliberately. ^{4 15 10 8 11 6 1}

analysisOf Cochrane, who came with extensive board-level experience, the committees concluded that he 'quickly succumbed to the dysfunctionality prevalent on the board', and that as interim Chief Executive he was 'an inside appointment', having served as a non-executive on a board that 'exhibited little challenge or insight', and was unable to convince investors of his ability to lead and rebuild the company. These are conclusions of a parliamentary inquiry, not findings of a court or regulator; Cochrane had told the committees that he sought to challenge executives 'in an appropriate manner'. In his written response, Cochrane said the committee appeared in a number of instances to have taken his evidence out of context and that he did not accept many of the report's conclusions, but that in view of the ongoing investigations into Carillion's insolvency it would not be right to comment in detail at that time. ^{4 1}

analysisThe committees described Emma Mercer as the only director prepared to concede that Carillion had engaged in aggressive accounting: on her return to the UK she quickly spotted an anomaly in the way the company classified receivable balances on construction contracts, calling it 'sloppy accounting', and they concluded that she was 'the only Carillion director to emerge from the collapse with any credit'. This is the assessment of a parliamentary inquiry, which uses 'director' loosely here, as Mercer did not join Carillion plc's board; the accounting review that followed her concerns is covered with the dossier's accounting records. ^{4 1}