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Monday 11 December 2017

He's just a semi-state boss. So why was Padraig paid €750K last year ?

Carissa Casey on the ESB chief whose massive salary has come under fire

What do ESB chief Padraig McManus and L'Oreal babe Cheryl Cole have in common? They both reckon they're worth it.

The delectable Ms Cole is referring to her shampoo. McManus, or rather his doughty media handler, may not use the exact phrase -- but it's a good summary of the defence offered for the ESB chief's €750,000 remuneration package.

McManus's salary is back in the spotlight after we learned this week that he, along with all ESB staff, is entitled to a discount of up to 55pc on electricity bills. Fine Gael's Leo Varadkar raised the issue in the Dail in a flurry of outrage.

More worryingly for McManus is the news that the Government will now be giving three-monthly reports to the EU on how cuts in the public sector wage bill are progressing.

The ESB chief is an obvious target for cost-cutting. He earns more than the Taoiseach, who many believe is overpaid anyway. He also earns more that Jean Claude Trichet, governor of the European Central Bank and current defender of the single currency.

In fact, at €353,000, Trichet's salary is less than half the remuneration paid to McManus in 2009.

The 58-year-old ESB chief took a 10pc salary cut on April 1, 2009, but managed to pull off the not inconsiderable feat of still earning more than he did in 2008, according to the ESB's Annual Report.

The wage cut came into effect in April 2009 after a bonus of €105,410 and 'long-term incentive' of €103,906 were paid. In 2008, his total compensation was €654,000, compared with €750,000 in 2009.

Perhaps not surprisingly, the subject of McManus's pay generates an energetic response at the ESB press office. Asked to explain why McManus earns such a staggering amount, Brian Montayne, the ESB's corporate communications spokesperson, vigorously pointed out all that the semi state contributes to the Irish economy. He also notes that McManus's salary is negotiated between the chief executive and the Department of Finance.

Born in Co Kildare, McManus is described as a second-generation ESB lifer. His father worked as an engineer in the company and McManus joined in 1973 after he completed an engineering degree at UCD. He left briefly to work for a German company, before returning to the semi-state body. He commutes from his home in Naas to his office at the ESB headquarters in Dublin's Fitzwilliam Street.

Aside from these scant details, we know very little about McManus, since he is not a public figure in the way that chief executives of private sector companies are required to be.

The ESB does not have to hold an annual general meeting for shareholders every year. Media inquiries are handled by the press office. Oversight by the Department of Finance is carried out well away from the public eye.

Early last year, he made a rare public appearance on the TV series One to One with Aine Lawlor and spoke about a shortage of engineers in the country and the future of renewable energy here.

He deftly side-stepped more difficult questions, including the suggestion that the ESB unions were the "shock troops" of the labour movement.

It is difficult, if not impossible, for someone on McManus's salary to criticise the money paid to his workers. Various figures for the average salary at the ESB are bandied about.

A 2006 report by Deloitte suggested that power-generation staff are paid on average €100,000 a year. Others calculate that the average wage at the semi state is between €60,000 and €70,000.

In early 2009, ESB workers were given a 3.5pc wage increase at a time when most other workers in the country were taking pay cuts.

On top of this, we learned this week that ESB workers benefit from an electricity discount scheme, worth up to €470 a year. The scheme has been in place since 1981 and entitles all employees at the company to 55pc off a maximum of 1,000 units of electricity per two-monthly bill.

In comparison, employees at Airtricity, the ESB's private sector competitor, receive a 5pc discount on the rates offered to customers. Airtricity estimates that the average consumer uses 4,500 units a year, or less about 760 units per two-monthly bill.

Meanwhile, according to the National Competitiveness Council, we pay 35pc more for energy than most of our European neighbours, with only Cyprus paying more.

Some 90,000 ESB customers are estimated to be in arrears with bills and the company is disconnecting more than 2,000 consumers a month.

Until recently, these disconnections were referred to as "de-energising" customers.

But the ESB could be facing a little de-energising of its own. For several years now there have been hints that it be broken up and sold, a prospect that horrifies many within the organisation, especially with the ghost of the now privatised Eircom still stalking the land.

The privatisation of the ESB is part of the strategy of Fine Gael, the party most likely to lead the next government.

Brendan Ogle, who chairs the ESB's unions, says that privatisation will be fought at all costs.

He makes no apology for the fact that his workers are well paid, and like the ESB corporate communications office, suggests there is a media campaign against the organisation. But he agrees that the price of electricity is "ridiculously high".

"The price is set by the regulator and it's been forced up by this Government over the years to encourage competition in the market," he says.

Again, like the corporate press office, he points out that staff costs account for just 10pc of the price of electricity.

'It's very easy to pick out a group of workers at the moment and say, look at them getting paid more than me. People here live in the real world and they know what's going on in the economy," he says.

His members do feel under pressure from all the coverage of their salaries and benefits, he adds.

Ogle refuses to discuss McManus's salary but expresses concern about the high level of remuneration for chief executives generally.

One of the very obvious reasons why life at the ESB has been so cosseted from the harsh reality of economic turmoil faced by the rest of the country, is that the ESB unions are indeed, as Aine Lawlor suggested, the "shock troops" of the labour movement.

No government is prepared to do a battle with a group of workers capable of plunging an already bleak Ireland into total darkness.

But with the public purse so empty and a widespread belief that the economy needs a stimulus package for jobs and growth, such a battle may be necessary.

The sale of state assets like the ESB would generate much-needed funds for stimulus.

It was Fine Gael spokesman on communications Leo Varadkar who raised the issue of ESB workers benefiting from an electricity discount. He did this on the same night that Fine Gael finance spokesman Michael Noonan stated on Prime Time that he had discussed the sale of state assets with the IMF.

Varadkar agrees that it is the energy regulator who "technically" sets electricity prices.

"I think the regulator has been very soft with the ESB," he says.

His party will sell off all but the ESB grid which, in the national interest, will need to be kept in state ownership.

He is prepared, he says, to do battle with the unions but would be happier to work with them.

He points to successful privatisations such as Aer Lingus. "In some cases staff have netted up to €90-€100,000 in free shares," he points out.

If that's the opening salvo in negotiations with the unions it's a generous one.

There are few workers who wouldn't welcome that kind of windfall these days.

And if that's what an average ESB worker might expect in a privatisation deal, one wonders what McManus would get.

Last year he came to the end of a seven-year contract and he's now signed up for three more years, taking him to July 2012.

It's a safe bet by then the battle to privatise the ESB will be won or lost.

Whether the consumer, or indeed the hard-pressed taxpayer sees any saving, is another matter entirely.

Irish Independent

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