Friday 22 March 2019

FTSE-100 chief executives paid 94 times more than their staff

FTSE-100 firms listed on the London Stock Exchange include Irish companies like CRH and DCC. Photo: Simon Dawson/Bloomberg
FTSE-100 firms listed on the London Stock Exchange include Irish companies like CRH and DCC. Photo: Simon Dawson/Bloomberg
John Mulligan

John Mulligan

The chief executives of the FTSE-100 share index - which includes Irish firms CRH, Paddy Power Betfair, Smurfit Kappa and DCC - were paid an average of 94 times more in 2016 than the average employee at their companies, according to a new study.

The annual survey of European top-brass pay by the Vlerick Business School in Belgium found that leading UK executives are the highest paid, on average, relative to their own employees, amongst business leaders in other EU countries surveyed.

The revelations come amid a continuing debate regarding executive pay and growing legislative efforts in Europe to push for the average employee pay to be revealed in the annual reports of stock market-listed companies.

"Companies having a better financial performance, try to make more efficient use of their money," said Xavier Baeten, a professor of management practice at the Vlerick Business School.

"It isn't the case that in order to have a better-performing firm, you need to have a better-paid CEO," he added.

The ratio of executive pay at FTSE-100 companies relative to the average earned by employees at the firms, beat that earned in by executives in all the other countries studied by the business school: Germany, France, Sweden and the Netherlands.

In 2016, Albert Manifold, CEO of Ireland's biggest company, CRH, received a total remuneration package of €10m last year - a record at the global building materials giant. But €4.8m of that related to payments received under a long-term incentive plan.

At the company's annual general meeting in April, Mr Manifold defended his package.

"When shareholders do very well, I do very well," he said, noting that the company has generated significant returns for shareholders.

Tommy Breen, the former CEO of diversified distribution group DCC, was paid a total of €5.7m in the company's last financial year. Mr Breen retired from the role in the summer. His pay packet included a €1.4m bonus and €2.3m in payments under a long-term incentive plan.

The company's operating profit in its last financial year soared almost 21pc to £345m (€388.5m).

At packaging giant Smurfit Kappa, CEO Tony Smurfit was paid a total of €2.4m in 2016. That included a base salary of €1.1m, a €285,000 cash bonus, €285,000 in deferred shares, and a performance element of €366,000.

Smurfit Kappa posted a 5pc increase in its earnings before interest, tax, depreciation and amortisation last year to a record €1.23bn.

At Paddy Power Betfair, departing CEO Breon Corcoran received a total remuneration package of £1.5m (€1.69m) in 2016 financial year - the year on which the Vlerick Business School based its most recent report.

Mr Corcoran's remuneration at the gambling group included a base salary of £642,000 and a £798,000 bonus.

Many listed companies, including CRH, Smurfit Kappa, DCC and Paddy Power Betfair, already give their shareholders a say on pay via non-binding votes at their annual general meetings. While the votes aren't binding, they are a way in which shareholders can effectively voice dissatisfaction or approval of executive pay.

Negative results are highly embarrassing for listed firms.

Irish Independent

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