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Carillion directors' bonus pay halted

Bonuses and severance payments to Carillion directors have been stopped, the Insolvency Service has announced.

A statement from the organisation, which is handling Carillion’s liquidation, said bonus payments to directors and severance pay to former executives beyond the date of the firm’s collapse were to cease.

Carillion’s executive bonuses have been under the microscope since September when it emerged that the contractor had amended rules that had previously allowed investors to claw back bonuses awarded to its top executives.

The changes appeared in the remuneration section of Carillion’s 2016 annual report and were designed to make it harder for investors to claim back bonuses paid to directors.

The contractor’s policy was to continue executives’ pay and bonuses for 12 months following the termination of their contract, or until they found new employment, according to Carillion’s 2016 Annual Report.

Payments were made on a month-by-month basis.

In 2016 Carillion directors received just over £3m in salary, bonuses, benefits and pension contributions, with bonuses alone amounting to £385,000.

The then chief executive Richard Howson received £245,000 in bonus payments on top of his £660,000 salary.

The contractor made considerable changes to its management team over the course of 2017, which saw several of its bosses moved on.

Mr Howson stepped down in the immediate aftermath of its first profit warning in July, to be replaced in the interim by Keith Cochrane.

A month later Mr Howson was back in his old role as chief operating officer, although it was confirmed he would leave the firm within a year.

At the time it was reported Mr Howson was kept on board to focus on problem contracts and to “get involved in collecting cash”.

In September, the contractor revealed its chief financial officer Zafar Khan was to leave with immediate effect. It was also confirmed that Mr  Howson was to exit at the end of the month.

The company’s 2016 results showed Mr Khan’s salary to be £425,000.

Earlier this week business secretary Greg Clark intervened to fast-track an investigation into Carillion’s directors following its collapse.

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