You are a consultant brought in to advise the Department of Business, Energy and Industrial Strategy (BEIS) on how executive compensation targets may have contributed to the collapse of Carillion. You have been tasked to write a report which:
Examines the link between executive remuneration and creative accounting in the existing accounting, corporate governance and financialization literature (40 marks)
Analyses the changing structure of executive remuneration at Carillion in its final 5 years of accounts and considers whether this contributed to Carillion’s ultimate collapse (40 marks)
Makes recommendations for the reform of remuneration practices in light of your answers to 1 & 2 (20 marks).
Q1 requires a review of the academic literature on ‘financialization’ and aggressive accounting practices. You also need to link this to executive compensation (remuneration), specifically in relation to financial misconduct/misrepresentation.
Q2 requires the use of accounting data and review of the remuneration reports, which can be accessed through the annual reports. You may also want to review the Work & Pensions Committee’s documents on Carillion’s Remuneration Committee and the BEIS/DWP report on Carillion’s collapse which also contain very useful commentary. Newspaper coverage, analyst reports and industry sources may all add texture to your findings
Q3 requires your own thoughts, with background reading on executive remuneration after financialization
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