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Sunday 4 December 2016

Howlin moves to block future bonuses to semi-state chiefs

Siobhan Creaton

Published 20/05/2011 | 05:00

Labour Minister Brendan Howlin has moved to block any future bonus payments to semi-state bosses by issuing written instructions telling the remuneration committees to stop these payments indefinitely.

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Semi-state companies have been receiving letters from the various ministers they report to outlining Mr Howlin's instructions. A letter seen by the Irish Independent states that Mr Howlin has instructed the civil servants who attend the remuneration committees when they are deciding the chief executive's pay to veto all future bonus payments.

The payment of performance related bonuses are "not appropriate" in the current circumstances and should cease indefinitely, the letter states.

A spokeswoman for the minister said this instruction applies to all bonus payments regardless of when they relate to.

Some semi-state companies still have to consider bonuses that are due under their chief executives' contracts for 2010 where they are entitled to a payment because they have met specific targets.

Complying with the minister's instructions could pose problems for board members because chief executives' contracts allow them to earn bonus payments once they have performed as required.

The letter acknowledges this difficulty but tells the semi-state chairmen and board members they must "take full account" of Mr Howlin's express wish. The boards are also told to acknowledge receipt of this letter and confirm in writing that no bonus payments to the chief executive of their organisation will be paid.

The minister's spokeswoman said the move to block bonus payments was part of the ongoing review of public sector pay.

The pay and bonus packages within companies like the ESB, Bord Gais and Bord na Mona were highlighted in economist Colm McCarthy's review of the sector.

It showed semi-state bosses who took pay cuts in recent years were sometimes "more than compensated" by an increase in other parts of the pay package and were enjoying substantial payments despite the deterioration of the government finances.

The heads of 10 semi-state companies were paid a combined €4.4m in 2009, according to the report, with ESB chief executive Padraig McManus earning the biggest package of €752,568.

Former Finance Minister Brian Lenihan signed off on generous salary hikes for semi-state bosses at a time when the government finances were deteriorating.

The ESB chief's pay deal rose from €534,998 in 2007 to €654,321 in 2008 and to €752,568 the following year. Bord Gais chief executive John Mullins's salary rose by 26pc from €213,000 in 2007 to €270,000 in 2009, while EirGrid chief Dermot Byrne's salary increased by 17.5pc to €228,000 in the same period.

Commenting on Mr McCarthy's review, Mr Howlin said some people would be "shocked" at some of these pay rates which were out of kilter with what people were earning in other parts of the economy.

Irish Independent

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