Thursday 8 December 2016

Semi-state pay soared as economy nosedived

Lenihan signed off on series of generous salary increases

Paul Melia and Michael Brennan

Published 22/04/2011 | 07:17

BRIAN Lenihan signed off on a raft of generous salary hikes for semi-state bosses while the economy was in freefall.

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Chief executives of companies were also given bonuses up to a third of salary -- despite a supposed government clampdown on executive pay.

Finance Minister Mr Lenihan rubber-stamped a series of massive salary hikes to executives, including the ESB's Padraig McManus, whose basic salary rose from €376,879 in 2007 to €432,688 in 2009.

Bord Gais chief executive John Mullins enjoyed a 26pc hike from €213,000 to €270,000 in the same period, while EirGrid CEO Dermot Byrne's salary rose 17.5pc to €228,000.

The Irish Independent has learned that concerns were raised more than five years ago about the generous entitlements enjoyed by senior management at the semi-states. But despite this, the Government continued to approve salary hikes across the sector at a time when the public were being subjected to massive tax rises and cuts in social welfare.

Mr Lenihan confirmed last night the salaries of semi-state bosses would have come to his attention for approval.

The publication of a review by economist Colm McCarthy this week thrust pay in semi-state bodies back onto the political agenda.

New Public Reform Minister Brendan Howlin promised to slash executive pay in the sector -- but is only able to do so for new entrants. However, it emerged that guidelines on pay and conditions for chief executives in the commercial state bodies were introduced as long ago as March 2006, because of concerns. But they were then ignored, even as the economic downturn worsened.

The 2006 guidelines were developed by civil servants and stated: "The group has been established to look at this area because of cases where the approach to remuneration and conditions of employment of senior executives could be considered to be more beneficial to the executives than the norm."

They stated that all salary hikes had to be approved by the Finance Minister, and that performance-related pay could not exceed 25pc of basic salary.

"Full bonus payments should be the exception rather than the rule," it said.

But just a year later the guidelines on bonuses were set aside.

SECRET

In 2007, the Hay consultancy firm was commissioned by then Finance Minister Brian Cowen to compare the pay and bonuses of commercial semi-state bosses against comparable jobs in the private sector. The report was never published.

However, the Government still decided to reward the executives with increased pay and bonuses. A new system emerged where 25pc of salary could be paid in bonuses one year, and another 10pc over three years -- exceeding the 25pc limit from a year before.

For example, Waterford Port Company's Stan McIlvenny was paid a salary of €124,993 in 2010 and has accrued a bonus of €43,748.

The Fianna Fail-Green Party coalition did not ultimately order a clampdown on executive bonuses in the commercial semi-states until last February.

The Department of Finance then stated that the levels of bonus payments were "inappropriate in the light of the very serious state of the public finances".

This came just a month before the Government was thrown out of office.

Last night, Mr Lenihan said: "I certainly don't remember any substantial increases and I do recall refusing increases. Because of the economic positions, there were several refusals by me." He said that last night he asked the Department of Finance to make further inquiries about the timing of the salary increases for semi-state chief executives.

"Some of the salary increases may be contractually agreed increases, or may flow from national agreements, but that's more likely to have been in 2007 and early 2008," he said.

Mr Lenihan made it clear that bonuses were dealt with by the remuneration committee of the semi-state bodies. However this committee does include a representative from Finance.

"But the minister has no function in relation to bonuses. They are as contractually agreed, or as determined," he said.

Last night An Post, Bord na Mona and the Dublin Airport Authority refused it say if their CEOs would take a pay cut. The question of bonuses for 2010 has not been decided in Bord Gais, Bord na Mona and the Irish Aviation Authority. Coillte and the Dublin Port Company were not available for comment.

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