Average pay for chief executive dips below €1m as bonuses fall

THE AVERAGE pay for a chief executive in an Irish-listed company slipped below €1 million last year, as bonuses decreased across the board.

Figures compiled by consultants Hewitt show that the average pay package for the top earner in a company listed on the stock exchange was €936,000 in 2009, down from €1.3 million a year earlier. The average basic salary for the highest-paid director was €612,000 in 2009, more or less unchanged on 2008.

Dramatic differences emerged when bonuses and “other variable pay elements” were included, however, with Hewitt finding that the average bonus paid to a chief executive last year was 19 per cent of salary, down from 60 per cent in 2008.

This equated to a 66 per cent drop in the average bonus paid to a chief executive.

Hewitt examined the remuneration packages for directors in all 69 Irish companies listed on the stock exchange, as of the end of March last year. The market capitalisation of the firms ranged from €1.8 million to €13.3 billion, with a median of €130 million.

The general pay trend was negative or neutral within the firms surveyed, with almost two-thirds choosing not to increase directors’ pay last year.

Hewitt managing director Kieran Barry said the results reflected a growing consciousness of remuneration policy within listed companies. “The pay for performance culture is really getting traction in Ireland,” said Mr Barry.

The average pay for a finance director last year was €715,000, down 31 per cent from €1 million in 2008. Average remuneration for other directors was €636,000, marking a drop of 21 per cent from €800,000.

The consultants found that total pay for finance directors tends to be worth about 76 per cent of their chief executive’s package, while other directors tend to receive about 68 per cent of the boss’s remuneration.

The only category of senior director where pay increased last year was the non-executive chairman, whose fees increased by 3 per cent. Hewitt said this may reflect “the greater time commitment that they are giving to their companies”.

The average total package for a non-executive chairman fell despite the slight increase in fees, however, declining from €161,000 to €149,000.

Mr Barry expects executive pay to remain in the spotlight this year, as the relationship between performance and pay is accorded greater importance.

He believes incentive schemes encouraging “undue risk-taking” are likely to be replaced as remuneration committees take on more independence. He also predicts shareholders will subject pay packages to greater scrutiny, while high termination payments to departing directors will become a thing of the past.