Our captains of industry lead field in bumper pay and bonuses
We may be in the midst of our worst-ever financial crisis, but our top bosses have never had it so good, writes Nick Webb
AS Sean Quinn's empire crumbles and former high-flying property moguls go splat, Ireland's top public company bosses proved almost recession-proof in 2010 as they received bumper pay increases on the previous year. In fact, many of our most prominent corporate leaders got paid far, far more than their British and European rivals.
Tullow's Lamborghini driving Aidan Heavey was the top-paid executive of an Irish listed company last year. The former Aer Lingus accountant turned oil explorer netted a staggering €7.67m in wages, bonuses, stock awards and conditional awards. A spectacular series of African oil discoveries catapulted Tullow Oil into the big time and the Sandyford-headquartered company is now worth €14bn.
Although Heavey's pay of €7.67m (that's €21,000 per day) was the mega-package of 2010, it pales into comparison to his near €33m pay day in 2008 which was fuelled by options trading. His package also included a €44,000 car benefit. Heavey's right-hand man at Tullow, Graham Martin, picked up a remuneration deal worth about €4.32m last year between shares vesting, stock awards and salary. While Tullow bosses did well in 2010, shareholders were less fortunate with shares falling four per cent over the year. Heavey's pay was above that of his rivals at the €8bn-valued Cairn Energy, with the Scottish company paying its boss Bill Gammell a basic fee of €1.1m -- although this was boosted by about €2.25m worth of bonus shares vesting in the year.
Paddy Power is one of the best performing companies on the Irish stock market and, boy, does it pay its executives well. Patrick Kennedy earned about €4.73m last year, largely through more than 84,000 bonus shares vesting. These were worth €2.58m at year-end. He also earned €735,000 in paper profits on options awarded during the year. Kennedy's core salary package actually dipped from by €5,000 to €1.417m in 2010. His right-hand man, Breon Corcoran, also scored big time with €2.25m worth of shares vesting based on the year-end share price.
Options gains and a €785,000 salary saw him earn close to €3.59m for the year.
Smurfit's Gary McGann may have earned as much as €4.18m last year as shares rose nine per cent in the year. McGann, a former board member of Anglo Irish Bank, received €2.64m in salary, bonus, benefits and pension payments -- up 18 per cent on the previous year. Smurfit also has a massively complicated bonus scheme which uses different classes of convertible shares. McGann exercised 633,000 of these shares, which, based on the conversion prices and the Smurfit share price at the end of 2010, could have seen him sitting on a paper profit of €1.54m from these trades. Smurfit finance head Ian Curley earned €1.4m in ordinary pay and bonuses but he could be eyeing paper profits of €1.2m on convertible share trading, which would bring his yearly earnings up to €2.5m. Smurfit declined to comment on the convertible share trading last week. Smurfit's closest European rival, the larger €3bn-valued Mondi, actually paid its chief executive David Hathorn about 18 per cent less than McGann's core earnings.
Basic salary and remunerations levels increased dramatically for Irish company chiefs last year . Excluding stock and option awards, the 10 highest paid chief executives -- rather than highest paid executives -- earned a total of €15.51m in basic salaries, cash bonuses, pension top ups and perks ranging from car allowances to tax advice and top-end medical cover. This compares with €14.64m a year earlier.
The cash and benefits elements of chief executive pay rose almost six per cent in the year compared with 2009 levels. However, this is only part of the story. The vast majority of the bumper remuneration paid to the top executives at Ireland's major listed companies was in the form of share awards or stock options which may vest, subject to hitting certain performance milestones in coming years.
Aryzta boss Owen Killian received the biggest options deal of the year when he was awarded 300,000 shares in the company's "option equivalent" scheme. Worth a stunning €8.67m when awarded, Killian will have to stump up to exercise these options if he hits certain medium-term performance targets. However, he's already well in the money, as Aryzta's share-price rise meant that he had already made a paper profit of €1.45m on these options which, combined with his €1.86m wage, brings him up to combined earnings of €3.31m. Patrick McEniff, his number two, saw his 250,000 options rise by €1.21m -- although his salary is not broken out in the annual report. Killian, McEniff and Hugo Kane shared €4.8m, which would probably see McEniff's total earnings at somewhere close to €2.7m for the year. Shares in the croissant company rose 13 per cent over the year.
The Sunday Independent CEO pay list 2011 reveals the combined earnings paid by the largest stock market companies quoted in Dublin, based on the annual reports issued in recent weeks and months. The bank pay cap has seen top bankers fall right off the list and Kenmare's annual report has yet to be published. We have stuck with the largest 20 companies on the market. Since last year, we have overhauled how we calculate remuneration. As well as core salaries, bonuses, pension payments and benefits, we include paper gains made from stock options, rather than using the total amount of options granted.
Profits earned from trading options are also included when calculating overall remuneration. DCC's Tommy Breen made a killing, cashing in a stack of options last year. Breen gained almost €1.2m when exercising low price options given to him as part of his remuneration and he was also awarded nearly 54,000 options under his bonus plan. These had risen in value by €428,000 by the end of the financial year which, when combined with his €1.67m salary, bonus and benefits deal, saw him €3.28m richer in 2010.
While massive options packages were awarded with gusto in 2010, dismal share price performance left some bosses holding almost worthless paper at year end, badly denting their overall pay rates. CRH boss Myles Lee was awarded options worth close to €3m during the year, but by the end of December CRH's share price had fallen so much that these shares were underwater. However, between other shares that vested and his salary, benefits, cash bonuses and pension payments, Lee still cleared €2.62m in the year.
Shareholders nursed big losses over the year with CRH down close to 20 per cent in the year. Over at Lafarge, CRH's bigger European competitor, chairman and chief executive Bruno Lafond bagged core earnings of €1.99m. However, he also picked up close to €1m in options during the dear.
Elan's Kelly Martin was another who received a bumper options package only to be undone by a falling share price. Martin was awarded €3.9m worth of options and restricted stock units in 2010 but by the end of the year they were well underwater.
Glanbia's John Moloney saw his basic remuneration rise most of all, compared with his fellow company bosses. The cheese and milk magnate bagged €1.16m in fees, pension, benefits and bonus last year compared with a package of €587,000 a year earlier. Shares in the Kilkenny-headquartered group rose by almost 33 per cent.
Kingspan's Gene Murtagh was another boss who had a massive hike in his non-stock related pay package.
The Cavan-based insulation and building materials chief was paid €756,000 in 2009, rising to a cool €1.39m last year or an 84 per cent leap. Much of this was due to a bumper €635,000 bonus. He also bagged a €860,000 conditional share award subject to hitting certain targets. Murtagh's basic pay packet was smaller than his finance chief Dermot Mulvihill, who earned €1.47m last year.
Greencore's Patrick Coveney also received a bumper pay rise in 2010. Coveney's €1.58m package was a vast 36 per cent increase on the previous year. But shares in Greencore tanked in 2010, falling 10 per cent in the year.
Sunday Indo Business