The work and pensions and business, energy and industrial strategy (BEIS) committees have released a batch of documents including minutes from the Carillion remuneration committee (RemCo) and additional material from internal auditor Deloitte, which it says ‘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".’

The papers show Carillion had set out highly restricted circumstances in which bonuses could be clawed back from directors. Alison Horner, Carillion's RemCo chair, told the committee that they took legal and remuneration advice but the company’s remuneration advisors, Deloitte, denied that they ever provided such advice.

Deloitte's advice to Carillion on clawback in September 2017 noted that the already weak provisions further did not allow any of the bonuses paid in cash to be clawed back at all, the committee said.

In September 2017, after Carillion's first profit warning, the Remco looked again at the clawback conditions and agreed to extend to instances including serious reputational damage and failures of risk management.  However, the committee said it had seen no evidence that the RemCo 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 committee has also seen no evidence to suggest that any further attempts were made to return cash from bonuses to the business.

RemCo papers from August 2016 suggested flexibility ‘to increase the maximum bonus opportunity’, despite shareholder feedback of a growing dissatisfaction with the way that the company was setting its remuneration for senior managers. Investors criticised the use of ‘non-financial objectives’ and ‘personal and individual "stretch targets"’ – Carillion board's response was to recommended RemCo ‘rebadge’ the bonuses rather than make any fundamental change, the committee found.

Shareholders, including BlackRock, sought to limit the level of bonuses paid to directors in 2016. An attempt by the company to increase the maximum bonus level to 150%  – although they promised not use to use the maximum possible amount - was met with resistance, forcing the company to back down to 100% of salary maximum bonus pay-out.

The committee said that as the company started to issue profit warnings, the RemCo had to act to stop employees fleeing. Retention bonuses for senior managers below director level, salary increases for others, and a fee of £750 000 per annum for the interim CEO, higher than his predecessor’s salary, were all agreed.

Carillion continued to pay Richard Howson – who had been removed as CEO but kept on in a lesser role– his contractual pay until the company became insolvent, despite suggestions in the RemCo minutes that other options may be available.

Frank Field, chair of the 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.’

The committee has written to Alison Horner, formerly the chair of the Carillion RemCo, with a series of further questions about the issues raised in these papers.

Report by Pat Sweet