Former Carillion Finance Director 'dumped last of shares at first possible moment'

26 February 2018

The Work and Pensions and Business, Energy and Industrial Strategy Committees publish responses from Carillion's former Financial Director Richard Adam and his successor Zafar Khan, following up on their evidence in Parliament on 6 February.

Mr Adam retired on 31 December 2016. On 1 March 2017 he sold his entire existing shareholding for £534,000, including performance awards for 2013-2015 of £277,000 which vested on his retirement. He then sold his long term incentive plan awards for 2014 on 8 May 2017, the day they vested, for £242,000. In total, in March and May 2017 he sold shares (now worthless) worth £776,000.

Richard Adam's Carillion share sales following his retirement
Sold for £2.10 per share on Monday 2017 Shares Value, £
Shareholding 122,014 £256,286
Share bonuses for 2013, 2014, 2015 performance (vested 31/12/16) 93,472 £196,335
LEAP long term incentive plan for 2013 (vested "on or around retirement") 38,594 £81,065
Total on 1 March 2017 254,080 £533,687
Sold for £2.15 per share on 8 May 2017
LEAP long term incentive plan for 2014 (vested on 8 May 2017) 112,416 £242,234
Overall total March-May 2017 366,496 £775,921

The Committees learned in the evidence session on 6 February that board directors were shareholders but not members of Carillion's defined benefit pension schemes.  Mr Adam was noted, in evidence published on 23 February, as regarding funding the pension scheme as a "waste of money".

His successor as FD, Zafar Khan, had his contract terminated after just 8 months in the job, on 8 September 2017, having "spooked" Carillion's board with a financial update a few days earlier that showed there had been a further decline in the company's position since the "shock" £845 million contract write down in July 2017.

Mr Khan argues that it is surprising that the board were "spooked" by his update, as it "should have been apparent to the board by then that the company was struggling to improve both its net debt and profit positions."

Mr Adam presided over Carillion's finances for a decade

Rt Hon Frank Field MP, Chair of the Committee, said:

"Mr Adam presided over Carillion's finances for a decade. He, more than anyone else, ought to know the merits of Carillion shares as a long term investment in the light of his lengthy and lucrative tenure.

His assessment? Dumping the last of his shares at the first possible moment because he is - with his own money at least - 'risk averse'. What conclusions are we to draw from that? 
The other directors appear keen to set up the hapless Zafar Khan as the fall guy for the collapse. It is not lost on us, however, that he inherited Carillion's mountain of debt."

Further information

Image: iStockphoto

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