Farm Ireland

Friday 23 March 2018

Dairygold executive pay totals €2.7m 'to compete with Apple and PepsiCo'

Dairygold CEO Jim Woulfe. Photo: Fennell Photography
Dairygold CEO Jim Woulfe. Photo: Fennell Photography
Darragh McCullough

Darragh McCullough

Management at one of the country's biggest dairy co-ops has refused to disclose individuals' pay packages for fear that they will be poached by global giants such as Apple, Pfizer and PepsiCo.

Dairygold revealed for the first time in its annual report yesterday that its nine top executives shared €2.7m in remuneration packages last year, or an average of €300,000 each.

The Mitchelstown-headquartered co-op is owned by more than 3,000 dairy farmers based in Munster with a turnover of less than €800m per year.

But the business's top executives insisted that they were competing for the same staff with the likes of Apple, which generates close to €35bn in annual profits. "All these companies are 25 minutes down the road from us, and revealing individual members' pay would risk poaching," claimed Dairygold chairman, James Lynch.

The 12 directors that sit on the processor's board received €423,000 between them last year. This works out at on average more than €35,000 for each director.

Wages for executives increased by 1pc on 2014, while payroll costs for the total Dairygold workforce of 1,149 increased by 3pc last year to nearly €60,000 on average.

Management said that wage costs had increased due to longer working hours for staff dealing with greater volumes of milk, which increased by 19pc on 2014 following the removal of the limits imposed by the EU milk quota regime.

The news comes in the same year that the incomes of dairy farmers are predicted to halve to close to €30,000, due to a 40pc drop in milk price at farm level.

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The latest details to emerge on pay for top executives in Ireland's dairy processing sector follows the revelations by Ornua that its nine top executives shared more than €9m in remuneration over the last two years.

The increased level of detail on pay has been prompted by new accounting rules that came into force this year.

These changes are what prompted the controversy in the Irish Farmers Association last November, when it emerged that farmers were paying their former chief executive, Pat Smith, more than €500,000 annually.

It then emerged that the former president Eddie Downey was in receipt of a pay package and directorships worth close to €200,000 per year.

However, management at Dairygold insisted that the information in their annual report went much further than the minimum required by the new accounting regulations.

Chief executive of Dairygold Jim Woulfe said that the move to greater transparency in the accounts was a "journey" that would continue, but he declined to outline what additional information would be made public in the years to come.

"A co-op is different from a plc because the senior directors and management are appointed by members who entrust them to run the organisation," said Dairygold chairman, Mr Lynch.

"But we have to compete with plcs for staff, the likes of PepsiCo, Apple and big pharma companies down in Ringaskiddy."

He moved to assure the farmers that own and supply the co-op that everything was above board within the organisation.

"Transparency comes from credibility, and we have governance already in place, with a remuneration committee since 2004 and independent advisors that report all their findings to the board so that at all times it has been transparent," he said.

Despite the increase in milk supplies, profits at Dairygold dropped by 34pc to €19.2m last year on the back of the global downturn in dairy.

The co-op also subsidised the price it paid its farmers for milk to the tune of more than €20m in an effort to keep it above the break-even level of 26.5c/l.

However, management at the Mitchelstown-based processor maintained that the "solid financial performance" left the company well placed for growth over the coming years.

More than €50m was invested in upgrading capacity at their Mallow plant last year, bringing total capital investment by the co-op over the last seven years to €215m.

Mr Woulfe acknowledged that while 2015 was a "testing" year, 2016 would be even more challenging due to a global over-supply of milk.

Irish Independent