Firstgroup investors rebel over former Carillion boss
FIRSTGROUP has been hit by the fallout from the implosion of Carillion after shareholders in the bus and transport operator rebelled against the board appointment of the building contractor’s former finance chief.
More than a fifth of Firstgroup investors voted against the election of Richard Adam as an independent nonexecutive in an embarrassing blow to the transport group.
Mr Adam was one of Carillion’s senior bosses, serving as finance director between 2007 and the end of last year.
However, his legacy at the construction business has been severely tarnished by the shock profit warning that sent Carillion’s shares plunging by 70pc last week and spurred speculation it will be forced into a £500m emergency fundraising. Mr Adam was appointed to Firstgroup’s board in February and is chairman of the transport operator’s audit committee.
But 22.7pc of Firstgroup investors rejected his election as a non-executive at the Aberdeen-based company’s annual general meeting yesterday.
“I don’t think he’s qualified to be on the board,” one institutional shareholder told The Daily Telegraph, adding that he was concerned about Mr Adam’s track record at crisis-hit Carillion.
Despite the revolt, Firstgroup sought to defend the appointment of the controversial businessman.
“The board takes seriously its responsibility to keep in touch with shareholder opinion and as part of this continued dialogue will seek to engage with relevant shareholders,” the company said. “The board is confident that Richard’s commercial acumen and experience from senior roles in large and complex international companies is of benefit to the company.
Carillion is now in a battle for survival after admitting it was taking a
£845m hit to cover the cost of contracts that had soured and had suspended its dividend.
Richard Howson, its chief executive from 2012 whose tenure overlapped significantly with Mr Adam, was immediately replaced on an interim basis by Keith Cochrane, the former boss of industrial pump maker Weir Group.
Mr Cochrane faces a daunting challenge restoring investor confidence in Carillion, although his task has been made easier by a spate of contract wins.
The construction group revealed yesterday that it had been awarded work, worth at least £158m in revenues over five years, managing catering and mess facilities at military sites across the north of England, Scotland and Northern Ireland.
Carillion said it had the opportunity to double the £158m in revenues through catering and retail sales.
It came a day after Carillion was named as one of the winners of £6.6bn worth of contracts to construct the controversial HS2 rail line. Carillion shares climbed 5.5pc to 70.6p yesterday, having risen 19.2pc on Monday.