Dalata chairman forced to defend executive pay rises
Bumper pay and incentive increases for executives at Ireland's biggest hotel group, Dalata, have been defended by the company's chairman at the group's annual general meeting.
John Hennessy insisted that Dalata's executives, including CEO Pat McCann, were still being paid less than other executives of similarly-sized businesses in the sector, despite their pay hikes. Still, 26pc of shares cast at the AGM were opposed to approving the company's remuneration report.
Mr Hennessy said the company was "concerned" that such an amount of votes were opposed to the resolution.
"Our understanding of the reasons behind the vote… is principally around the question of percentage increases in pay that have been awarded to the three most senior executives in the company," said Mr Hennessy.
Influential shareholder advisory group ISS recently urged investors in the group to voice dissatisfaction with Dalata's decision to award a 21pc pay increase to chief executive Pat McCann, bringing his basic pay to €575,000 this year.
ISS also had concerns regarding similar percentage pay increases awarded to Dalata's two deputy chief executives, Stephen McNally and Dermot Crowley.
"We feel that perhaps by looking at percentage increases, those who voted against this resolution are not taking the full picture into account in two significant ways," Mr Hennessy insisted. "One is that we have taken quite a cautious approach to increases in remuneration by making sure performance is delivered first. Secondly, the amounts we regard as more important than percentages."
He said the new pay levels have been "pitched on the conservative side" and are in the lower quartile of pay in similar companies.
Stockmarket-listed Dalata has also raised the maximum amount of long-term incentive plan (LTIP) awards that can be made to the chief executive from 100pc of salary to 150pc.
"That's something that is not done in any way casually or flippantly," said Mr Hennessy.
The resolution to approve the company's new remuneration policy was overwhelmingly approved, with 99pc of shares voted cast in favour.
Dalata owns or operates 41 hotels in Ireland and the UK, with more than 8,000 rooms.
The company's remuneration committee has pointed out that under the current executive team's leadership, the company has posted revenue of growth of more than 350pc since it listed on the stock market in 2014. Since then, Dalata's market capitalisation has risen more than 56pc and profit after tax has soared more than 1,000pc, it added.
Speaking to reporters following the AGM, Mr McCann said that he's conscious of his own pay levels and that staff would be asked later this year for their views on executive remuneration. Dalata staff received a minimum 2pc pay rise last year, with an average 6pc rise, compared to a 13pc rise for Mr McCann in his salary.
"In any man's language, I'm very well paid. I won't deny that. But that's what you pay for," he said. "The big problem for shareholders is where they're paying for underperformance. In Dalata's case, you certainly can't say that."
He said that management have built the company from essentially being a €40m business in 2014 to a near €1bn business today.
"I think that's significant in itself," he said.
Dalata is currently adding 1,200 rooms to its hotel portfolio that will be ready in 2018. Mr McCann said it aims to add another 1,200 in both 2019 and 2020, most of them in the UK.