ESB chief goes on the attack over McCarthy criticisms
Published 28/04/2011 | 05:00
THE COUNTRY'S highest-paid semi-state boss last night attacked the academic expert who wants to see pay cut across the sector and key assets sold off.
ESB chief executive Padraig McManus -- who was on an annual package of €750,000 as recently as 2009 -- claimed that the report by UCD economist Colm McCarthy was both "inaccurate" and "negative".
He said the ESB had performed much better than was implied by the report and that Mr McCarthy's assessment of the company's pension fund was "completely off".
Mr McManus also defended his salary -- currently €400,000 -- insisting that the ESB chief executive should be paid at a level similar to the chief executives of bailed-out banks, whose salaries are meant to be capped at €500,000.
"There are a lot of inaccuracies in the report," he said. "The numbers in relation to the pension fund are not accurate and he (Mr McCarthy) certainly implied in his closing remarks on ESB that the balance sheet was challenged and it is not.
"I was a disappointed in the negative tone. I don't know why that was but if you read it, everything is done to try and produce a negative response. There are many errors in it in relation to the ESB."
Mr McCarthy's report, which was published last week, recommended that the ESB's energy-supply and electricity-distribution businesses and power-generation assets, as well as its international and consulting businesses, should be sold as a single entity.
He also recommended that the electricity-transmission grid, including the system that the ESB owns in Northern Ireland, should be transferred to EirGrid and kept in public ownership.
Mr McManus is the first head of any of the major state bodies to criticise the McCarthy report.
The company "resolved" its pension deficit following an accord with workers last year, he claimed. Mr McCarthy had cited a €2.1bn pension deficit in his report.
The ESB chief said: "He (Mr McCarthy) said ESB had put in €900m into the pension fund and then he said our contribution to the fund was 16.4pc. Those two things don't add up.
"(The correct calculation should be either) €570m and 16.4pc or €900m and 11.9pc.
"Then he calculated the salary levels of the ESB staff by adding in voluntary-severance costs on top of the pension contributions, which is a funny way of doing business.
"He also implied that the purchase of Northern Ireland Energy last year for €1.2bn was not a good deal for ESB. It is a very good deal for ESB."
Mr McCarthy declined to comment last night but his report makes clear that it used employer pension contributions as a proxy for pension costs due to accounting differences across state companies.
Mr McManus also defended his pay package, saying it had nearly halved since 2009.
"I voluntarily gave up my 35pc bonus and I took a 15pc cut in my salary. The conditions of the chief executive are set by the Minister for Finance.
"ESB is a very big company and you want to retain a good field of candidates for the position. I would say ESB has managed its business really well, even during the boom.
"The new chief should reasonably expect a salary equivalent to the state-owned banks."
A government spokesman said the minister had nothing to do with the CEO's salary.
However, it does set out parameters for the chief's remuneration, which are then used by the company board to set the conditions.