Dalata's 21pc salary boost to executives in pay reorganisation
Ireland's largest hotel group, Dalata, has revamped its executive remuneration structure - giving its CEO Pat McCann a 21pc pay rise this year - but insisting that its bosses would not get any further increases beyond levels awarded to its general staff until at least after 2019.
Share awards made under its long-term incentive plan (LTIP) will also have to be held for a post-vesting period of at least two years - a trait common with many other listed companies.
However, Dalata has also raised the maximum amount of LTIP awards that can be made to the CEO, from 100pc of salary to 150pc.
The company is also to make achieving LTIP targets more challenging for executives, it said.
Mr McCann - widely regarded as a leading executive in the sector - will be paid a basic salary of €575,000 this year.
That compares with €475,000 last year, when he was paid a total of just under €1.5m, including a €470,000 bonus.
Dalata's deputy CEO Stephen McNally will be paid €335,000 this year, compared with €275,000 in 2016 - a 21pc increase.
Fellow deputy CEO and head of business development and finance Dermot Crowley also sees his basic pay rise to €335,000 from €275,000.
"These salaries reflect the increased scale and complexity of the business and the roles following the sustained expansion in the size of the business, and adjusting for a level of under-competitiveness in senior executive pay," Dalata's remuneration committee notes in the group's annual report.
Dalata owns or operates 41 hotels in Ireland and the UK, with more than 8,000 rooms.
The committee pointed out that under the current executive team's leadership, Dalata has posted revenue 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 soared more than 1,000pc.
"While we continue to believe the revised salary levels fairly reflect the significant expansion of the company's operations, we recognise the concerns that investors have about executive salary inflation and that levels of fixed pay have been increased in consecutive years," the report noted.
"The committee has decided therefore that, during the lifetime of the proposed policy, no increases in salary will be made to executive directors above those awarded to the general workforce."
Since its stock market flotation, LTIP awards for Dalata executives have been solely determined based on total shareholder returns (TSR).
"The committee believes the time is right to broaden the performance measures in the LTIP to reflect the company's financial performance as well as relative market performance," the report notes, confirming that it was broadening the LTIP performance measures to incorporate stretching basic earnings per share (EPS) targets.
Half the potential LTIP awards in respect of 2017 will now be based on targets for adjusted basic earnings per share achieved in 2019.
Dalata's executive directors are also now expected to build up and retain a shareholding in the company equivalent to the value of at least 200pc of their basic salary.
"We believe the addition of the stretching EPS measure serves to make the variable remuneration framework more challenging," said the remuneration committee.
Under the new arrangements, Mr McCann can earn a maximum of €2m a year over the next three years.