Shockwaves from the collapse of outsourcer Carillion claimed another corporate scalp on Tuesday as the chief executive of rival Kier was unceremoniously ousted by the board.
Carillion’s demise has thrown an uncomfortable spotlight on the fortunes of peers such as Interserve — engaged in a major restructure likely to leave lenders in control — and Kier, which was forced into a £250 million rights issue in November as banks pulled away from the sector.
Kier chief executive Haydn Mursell paid the price for the sudden cash-call today as he was removed with immediate effect. His departure comes days after reports that investment guru Neil Woodford — a 16% shareholder — was pressing for the removal of Mursell or finance director Bev Drew after the rights issue and the halving of the share price in the past year.
Chairman Philip Cox, who will now run the business until a replacement can be found, said: “Now is the right time for a new leader to take Kier forward to the next stage of its development.” Peel Hunt analyst Andrew Nussey added: “We would note the strength of the operating teams and control structures at Kier during this period of change. We now expect the trading fundamentals to re-assert themselves.”
Mursell’s pay-off has not yet been agreed but he is likely to receive at least a year’s salary of £620,000. He was paid £1.2 million in total last year. Woodford declined to comment on his exit.
Kier, which has landed recent deals including Facebook’s new headquarters at King’s Cross, had net debts of £370 million but is on track to be cash-positive by the June year-end. Shares slid 1.25p lower to 523.5p.
The toppling of Mursell came as the Financial Reporting Council, which is examining Big Four accountant KPMG over its audit of Carillion, gave an update on its investigation today. The FRC has already carried out detailed interviews with audit team members and Carillion senior executives, and plans further interviews early this year. As well as KPMG, former finance directors Richard Adam and Zafar Khan are under investigation and the FRC widened the inquiry to cover KPMG’s 2016 audit today.
The watchdog, which is wading through “very significant” numbers of documents, said: “A key area of focus has been the financial performance of Carillion’s major contracts in both the construction and services divisions, and whether Carillion management and its auditors ensured that this was appropriately reported in its financial statements.”
KPMG suspended audit partner Peter Meehan and three other staff members over Carillion this week. Frank Field MP, chairman of the Work and Pensions Select Committee, said: “Where are the law changes that will stop these directors — and their merry bands of advisers, auditors and hangers-on — richly lining their own pockets at a cost of billions?”