The salary of CIE's chief executive was increased from about £100,000 (€127,065) to £181,952 earlier this year without the required approval of the Ministers for Finance or Public Enterprise.
The increase in Mr Michael McDonnell's salary occurred as part of increases the Government authorised last year after the Buckley report on salaries for executives of commercial semi-state companies.
The salary is understood to be within the authorised range.
The increase for Mr McDonnell was agreed by the then chairman of CIE, Mr Brian Joyce.
The new contract was signed in the weeks before Mr Joyce's unexpected resignation from CIE in March.
The Oireachtas Joint Committee on Public Enterprise and Transport heard on Thursday that the salary increase was now the subject of correspondence between the Department and the new chairman of CIE, Dr John Lynch.
A spokesman for the Minister for Public Enterprise, Ms O'Rourke, confirmed Mr McDonnell's salary and said there were "a number of issues to be resolved between the Department and CIE in relation to the manner in which the pay scale was approved".
Under the Buckley pay regime, the salaries of the chief executives of commercial semi-state companies must be published.
The Government decided in July 1999 to introduce salaries equivalent to 80-85 per cent of that recommended in the Buckley report, and authorisation was given to CIE to implement the new regime early this year.
But Mr McDonnell's pay increase was not submitted for approval as required, before Mr Joyce's sudden departure.
Sources say it was not Mr McDonnell's responsibility to notify Ms O'Rourke and the Minister for Finance, Mr McCreevy.
"It is a technical matter which needs to be resolved," said one source.
Difficulty with Mr McDonnell's salary was referred to during a committee hearing into huge cost overruns with a new signalling system for Iarnrod Eireann.
Next Thursday the committee is expected to question Mr McDonnell and other CIE officers.
Sources said yesterday the CIE board had been advised that the public airing of its difficulties in relation to the signalling system was likely to lead to additional costs.
