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What??? As pointed out earlier in the thread “Their CEO's basic pay increased from £790k to £1.5m in the five years he has been there and last March they paid out a record dividend on 18.4p a share. Part of the CEO's additional bonus was based on appointing a new Finance Director to improve leadership yet one year later they have unsustainable debts and a massive pension shortfall”.
Great!
To be fair to Mambo I think he was making a slightly different point that if Carillion's contract for HS2 let's say was taken into public ownership then the taxpayer could face an equal or greater bill by a combination of setting up the service and perhaps running it less efficiently so the cost is higher. I was highlighting the way that Carillion seemed to be rewarding its senior management and shareholders for what has turned out to be a failing company. You don't build up the level of debt and pension shortfall you highlight over a single financial year.
I don't buy the argument that a public sector body would have made the same loss. Carillion seems to have suffered through a combination of mismanagement by over-borrowing to support its over-rapid expansion via public sector contracts in a number of sectors, some of which they seem to have badly priced. Even at low interest rates it has to service the interest on that debt which it seems unable to manage.
Mambo mentions another company picking up the slack. I read that on HS2 which was won by a consortium including Carillion that the bid explicitly caters for the other winning tenderers covering the gap should one member drop out. It will be interesting to see how this pans out in practice. Carillion had released a major profits warning just before they were announced as one of the successful tenderers for HS2 by the Transport Department so don't be surprised to hear that Chris Grayling is on an overseas trip next week if Carillion goes belly-up.
Apologies for sounding aggressive, I don’t intend it at you. I just get so angry at the working man continually getting shafted.
This article details how Carillion bosses instead of looking after their company, staff and their pensions, instead protected their bonuses despite knowing the company was in trouble.
http://www.constructionenquirer.com/...ses-protected/
I pay into a pension scheme, I imagine most on here do. I pay tax, I imagine most on here do. The tax I pay goes to pay for projects like HS2, my pension contributions may well also get invested in a company like this. So I am potentially part-funding the CEO's payrise twice. He drives off into the sunset with his bags of dosh after doing a shitty job and my pittance pension takes another hit.
Does this really look like an example of a situation that doesn't affect the little people?
Bit too late. The CEO who appears mainly responsible for this was removed in July. Having read a bit more about this it appears that a lot of the issues derive from Carillion's valuation of the work on its books. In mid-2017 it wrote down the value by around £850m with a lot of the problems being on the non-UK side of the business in the Middle-east. This followed a "review" by the new Finance Director. Though as the new Finance Director was promoted from his role as Carillion's Financial Controller then you might have expected a bit more insight before this bombshell hit. The company would have been paying dividends and raising capital on the back of the original valuation so when that folded they have been in fire-fighting mode ever since with an interim and then another new Chief Executive appointed in November.
The old CEO probably cashed in his shares, he had 250k of them, at a far higher value than they are today and would have benefitted from the dividends paid on the overvalued company at the end of its 2016 financial year.