CEOs at commercial state bodies in line for pay increases following remuneration report

LAST UPDATE | 29 Apr

A REPORT REVIEWING the pay of CEOs at commercial state bodies such as RTÉ, ESB, and Uisce Éireann has hit out at a lack of “cost of living adjustments”.

The report also called for the reintroduction of bonuses, which were paused in 2011.

Public Expenditure Minister Jack Chambers said the Government has agreed “an approach to address a number of the issues raised in the report” and it means CEOs could be in line for significant pay increases.

The report is in response to a request last year from the Department of Public Expenditure to carry out a review of the remuneration arrangements for CEOs at commercial state bodies (CSBs).

Since 2011 there has been no systematic review of CEO pay, any increase in salary since that time has taken place on a case-by-case basis.

The Senior Posts Remuneration Committee in its report concluded that the current remuneration “is not optimal in serving the interests of the CSB, the State or the taxpayer”.

The Committee said CEO packages at CSBs have “fallen out of alignment with the market”, with “no adjustments for cost of living, significant changes to the role, or to the size or nature of the business”.

It added that this “inflexible fixed-point salary model does not reflect market trends”.

The Committee called for CEO pay to “recognise and reward performance, and attract the best prospective candidates into the future”.

This would include the reintroduction of bonuses, which were paused in 2011, to a limit of 25% of the CEO’s basic salary.

It also called for “sufficient headroom” between the pay of CEOs and the executive-level team.

However, the report did note that pensions arrangements and annual leave allowances for CEOs of CSBs are “generally more generous than arrangements in place for comparable organisations in the private sector”.

Survey results show that the median employer pension contribution rate is 25%, while the median annual leave entitlement for CEOs is 30 days.

The Committee said the pay package for CEO should “take account” of the superior value of pensions and annual leave allowance.

It has recommended a CEO salary range of 80-120% of the market median for each respective band.

The current base CEO salary of CSBs is equivalent to 68% of the market median, according to the report.

Chambers said the report “raised a number of vital issues which are currently being faced by our Commercial State Bodies at leadership level”.

“In the coming years many CSB CEOs will be required to deliver significant projects whilst managing the funding and financing of these projects,” said Chambers.

He said the Government has agreed “an approach to address a number of the issues raised in the report” and that this “new approach” will bring a “more structured and consistent process” to CEO remuneration.

He said a banded salary structure will be implemented for CEOs ranging from their current salary to the market median.

He added that there will be no backdating of any changes to pay and that any salary proposals or changes will be “subject to governance and scrutiny, with approval required by the relevant Minister, and with my consent”.

People Before Profit TD Paul Murphy has criticised the plans and said: “We have a government who are refusing to implement the promised increases to minimum wage workers, and yet is promising pay rises to some of the highest-paid managers in the state.

“This amounts to millions of euros on massive salaries for those at the very top, while the workers on the ground are told there’s no money for them. It is totally unfair.

“Rather than running water, public transport and postal services as private companies, aping the worst excesses and inequalities of big business, we should be running them as public services.

“It is workers and users of the service who should be in control, not overpaid government appointees.”