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Carillion chiefs doubled their 2011 earnings as profits fell

The top three executive directors at Carillion more than doubled their 2011 earnings to £3.35 million as group profits fell by 15 per cent.

The firm’s annual report reveals that former chief executive John McDonough, chief operating officer at the time Richard Howson, and finance director Richard Adam, all won salary-matching bonuses in the year. Their total earnings were up 43 per cent on 2010 levels.

Pre-tax profits at Carillion dropped from £167.9m in 2010 to £142.8m in the year to 31 December 2011, on flat revenue of £5.1 billion.

Mr McDonough - who retired from the firm in December after 11 years and is now chairman at development company Cornerstone - collected £1.5m in 2011, with his £632,000 wage doubled through a salary-matching cash bonus, along with £239,000 in other benefits.  In 2010, his earnings were £1.02m.

His targets included successfully shrinking the UK construction business from the 2009 turnover level of £1.8bn to £1.2bn in 2012.  It was down to £1.3bn by the end of 2011.

The report shows that employee numbers in construction services outside the Middle East fell by a third from 5,593 to 3,989. 

His other targets were to grow the international business and UK support services; to ensure contract selectivity and risk management “deliver cash-backed profit”; and to provide a succession plan.

His successor Mr Howson – who became chief executive in January – saw his £385,000 basic salary rise to £900,000 in payments in 2011, including cash and shares bonus and other benefits. His targets included the health and safety strategy and helping to secure his own succession.

Mr Adam’s basic salary of £408,000 rose to payment of £951,000. He hit net debt, average net debt, and underlying profit before tax targets, while also completing the firm’s refinancing and efficiency, quality and cost reduction targets.

Both saw earnings increase by 42 per cent on 2010, with part of their bonuses deferred through shares.

Total staff numbers were slightly down on the previous year, at 29,992, from 30,056. The wage bill went up from £838m to £846m.

Carillion plans to cut 1,500 jobs in response to the government’s cut to the feed-in tariff rate.  The total one-off cost for the Eaga acquisition doubled from £20m to £40m, due to redundancy and property exit costs.

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