Friday 22 September 2017

Rabbitte opens door for return of big bonuses

Minister warns of 'witch hunt' over semi-state pay

Communications and Energy Minister Pat
Rabbitte
Communications and Energy Minister Pat Rabbitte
Nick Webb

Nick Webb

Communications and Energy Minister Pat Rabbitte has opened the door for the return of bonuses for top performing bosses of semi-state companies such as ESB or Bord Gais.

"I personally see merit for performance-related pay in commercial bodies. I see no merit for it in the non-commercial sector," the minister told the Sunday Independent.

Payments of bonuses to semi-state bosses caused fury as the country faced massive wage cuts and tax hikes. Dublin Airport Authority boss Declan Collier surrendered his €106,000 bonus after uproar last June, with other semi-state chiefs forgoing performance payments.

Salary rates have also been slashed at the semi-states, with the late Brian Lenihan introducing a €250,000 cap for bosses. This was subsequently raised by the new government.

A number of high-profile semi-state chiefs announced that they were leaving their jobs after the cap was introduced, with ESB's Padraig McManus departing and Bord Gais chief John Mullins heading for the exit.

Last week, the ESB announced that Pat O'Doherty was to become the semi- state company's new chief executive. He is to be paid €318,000 per year, following a review of salary levels by the Department of Public Sector Reform.

Rabbitte suggested that there was "something of a witch hunt" when it came to the pay rates and bonuses of commercial semi-state bosses.

"Should the head of the ESB get paid more than the Taoiseach? Yes. It's a different job. The Taoiseach is in public service and different conditions apply," he told the Sunday Independent.

"We've reduced the pay of commercial semi-state chief executives to a level below which it would be dangerous to go in the best national interest," Rabbitte added.

However, the minister does not forecast further tweaking of semi-state salary bands in coming months. "I do not see any changes in the cap," Rabbitte said.

The sale of a minority stake in the ESB is one of the key issues facing Rabbitte's Department of Communications, Energy and Natural Resources. The disposal of State assets is a key requirement under the IMF/EU bail out. Discussions are under way with the Troika over the levels of sales needed. Initially the Troika demanded €5bn of asset sales to be used to pay down debt, with the Government seeking to sell just €2bn worth of State assets and to use the proceeds to fund a stimulus package.

Officials from the NTMA, Rabbitte's department, the Department of Finance and external advisers are examining plans for the sale of the stake. A report on the various options for disposal -- including a possible flotation -- are to be presented to the minister at the end of November.

It is thought that selling a minority stake to a major pension fund such as the €180bn California Public Employees' Retirement System (Calpers) or the €120bn Ontario Teachers' Pension Plan are preferred options rather than offloading shares to a private equity group.

The sale of State assets may be affected by the disposal of IL&P's Irish Life unit, which has seen its price tag tumble from €1.5bn to €1bn since the summer. "You couldn't ignore it," said Rabbitte.

Sunday Indo Business

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