Half the CEOs of commercial state companies earn in excess of €250,000 a year despite pay ceiling
By Conor O’Carroll.
Just over €75 million has been spent on the salary and benefits of Chief Executive Officers (CEOs) of commercial state companies in the past decade, a Village investigation has revealed.
The total salary of half of these CEOs has exceeded €250,000 a year, while some pay packages reach €300,000 and beyond. This is despite a ‘pay ceiling’ of €250,000 a year being introduced in 2011 by then Minister for Public Expenditure and Reform, Brendan Howlin, TD.
The cap was introduced amid the severe economic conditions facing the country at the time and set a general pay ceiling of €250,000 for future appointments to CEO posts within commercial state companies.
However, Village analysed the financial accounts of 28 of these companies since 2012 and found that while the basic salaries of CEOs typically fell below the pay ceiling, once the slew of benefits, performance bonuses, expenses and pension contributions were included, many of the salaries surpassed the government’s cap.
Since 2012, ESB has paid the most of any commercial state company on the total salary of its CEO, with over €4.2 million spent
State companies whose CEO’s basic salary exceeded the cap at the time of introduction were encouraged to take voluntary pay cuts to bring them in line with the regulations. Companies such as An Post, the Dublin Airport Authority (DAA) and Coillte complied, bringing their base salaries under the cap within a few years of its introduction.
The base salary of the CEO of ESB, however, has had their salary rise since the pay cap, having received an exemption from the government. According to financial records, former CEO Pat O’Doherty’s salary was €295,000 in 2012 and this has risen to just over €318,000 for current CEO Paddy Hayes.
As with every other company, Hayes’ salary is also enlarged with various benefits meaning his total remuneration surpassed €389,000 for 2022, making him the best-paid CEO of a commercial state company.
Despite resigning from the DAA mid-way through the year, Dalton Philips still received the 3rd highest package of all the commercial state company CEOs, with total remuneration surpassing €340,000.
Each of those in the top 10 received a total salary that surpasses the €250,000 pay ceiling and analysis by Village found that total earnings for a further three state commercial company CEOs breached the cap in 2022.
On average, there was a roughly 30% increase in total take-home pay from the base salary once all the benefits and bonuses had been added.
Responding to Village’s findings, Sinn Féin’s spokesperson for Public Expenditure and Reform, Rose Conway-Walsh TD said “CEO pay in many cases is excessive” and that the “cap needs to be enforced and should cover all benefits and performance-based payments”.
The total salary of half of these CEOs has exceeded €250,000 a year, while some pay packages reach €300,000 and beyond
Others who earned just below the cap included the CEOs of Dublin Bus and the Dublin Port Company, both of whom left their respective roles at some point in 2022 and in previous years earned over €250,000.
Changing CEOs can often be expensive for these companies, with retirement benefits and pay for interim CEOs often driving the yearly cost up substantially.
Long-term ESB CEO Pat O’Doherty left the company after he retired in August 2021 and received over €500,000 before leaving. Hayes was appointed to replace him and after receiving his salary for the remaining months of the year, the total outlay for the year on CEO pay was almost €650,000.
Another €500,000 was spent by VHI that same year when John O’Dwyer retired in July 2021, taking home €387,000, while a further €136,000 was spent on Declan Moran as interim CEO. A further €366,000 was spent on two interim CEOs the following year, exceeding the typical remuneration of previous years.
A High Court decision in 2022 also obliged the Shannon Foynes Port Company to pay €373,000 in performance-related payments to current CEO Pat Keating for the years 2010-2017, substantially increasing the outlay for the company.
Since 2012, ESB has paid the most of any commercial state company on the total salary of its CEO, with over €4.2 million spent. The DAA and VHI are close behind with roughly €4 million spent apiece, while RTÉ and An Post make up the top five having spent a little of €3.5 million.
A further seven commercial state companies paid over €3 million in remuneration of their CEO over the period.
In 2011, the government also introduced general salary guidelines for newly appointed CEOs of state commercial companies. Village analysed these figures and compared them with the most recent base salaries of the current CEOs, adjusting for inflation.
On average, there was a roughly 30% increase in total take-home pay from the base salary once all the benefits and bonuses had been added
Pay for CEOs at 12 state companies have exceeded these guidelines when adjusting the figures for inflation. Among those whose salaries exceed the adjusted salary guidelines by 10% are the Irish Aviation Authority (11%), Eirgrid (10%), the Cork Port Company (20%), the Shannon/Foynes Port Company (23%) and Transport Infrastructure Ireland (25%) – previously the National Road Authority.
Not all state companies exceeded these guidelines, however, with some CEOs, including CIE (-36%), ESB (-13%), TG4 (-13%) and RTÉ (-8%), all receiving a base salary under the inflation-adjusted figures. Though, the appointment of Kevin Bakhurst as RTÉ Director-General and an increased base salary to €250,000 will all but wipe out the difference.
Conway-Walsh told Village that “the correct and fair level for CEO pay is something that can be debated but state-owned companies must adhere to the salary cap set by government”.
“The current approach to CEO pay in state-owned enterprises undermines transparency”, she continued, and while “there should be performance-based component to CEO salaries, this should be done within the existing cap”.