Revealed: How Ireland’s top CEOs were paid last year as their salaries soared by 27%

The average pay package of the 18 long-standing bosses of the largest Irish publicly quoted companies soared by 27 per cent to €3.46 million last year, as global equity markets hit record highs and corporate earnings rose as economies reopened following the worst of the Covid-19 pandemic, according to figures compiles by The Irish Times.

The figures include chief executives of Irish companies listed on the Iseq 20 index in Dublin and FTSE 350 in London that had been in their roles for at least two years as the end of their companies’ latest annual financial period, and are skewed by some large stock bonus awards.

The median chief executive compensation package, which gives a better picture of the pay landscape as it eliminates the distorting effects of outliers on the pay scales, rose at an even faster pace, by 42 per cent, to €2.02 million, close to the €2.22 million median before the Covid-19 pandemic.

However, the outlook for bonuses, which are heavily linked to stock-price performance, has deteriorated dramatically so far this year, amid growing fears of a global downturn due to soaring inflation, the effects of the war in Ukraine, and rate hikes by major central banks. The Iseq 20 index has slumped more than 22 per cent since the end of December and global shares, measured by MSCI All Country World Index, are off about 17.5 per cent.

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The International Monetary Fund (IMF) this week cut its 2022 global growth forecast for the third time this year and now expects the world economy to expand by just 3.2 per cent, about half the rate seen in 2021. This will weigh on corporate earnings – the other main component of executive’s variable remuneration.

The IMF sees growth slowing to 2.9 per cent in 2023. It defines a global recession as being growth below 2.5 per cent. And it warned that if that Russian gas supplies are completely cut off to Europe, growth in the euro zone would drop to near zero.

With interim results season now in full swing, financial markets data firm Refinitiv estimates that European companies’ second-quarter annual earnings growth slowed to 23 per cent from post-lockdown rates of 153 per cent a year earlier and 59 per cent for the fourth quarter of last year. However, the headline figure is hugely distorted by energy groups’ soaring profits. Excluding these, European earnings are estimated to have crept up by just 4 per cent in the second quarter.

All of this is playing out in how senior corporate types on the move are treating negotiations with prospective employers, according to Stafford Bagot, the head of international executive search firm Heidrick & Struggles’s Irish operation.

‘Uncertain environment’

“We’re seeing that the general uncertain environment and potential windy times ahead in the short term is driving a greater focus on fixed-pay expectations from CEO and C-suite candidates, whereas the emphasis in recent years would have been on the long-term incentive part of remuneration packages,” Bagot said. C-suite refers to top executive positions with “chief” in their title.

“It is still very much a candidates’ market out there – and there are some who are wanting a significant lift in salary to move company, which is often not realistic and reminiscent of the Celtic Tiger days.”

The €13.9 million remuneration last year of Albert Manifold, building material giant CRH’s CEO of eight years, set a new record for the head of an Iseq company – driven by a €3.07 million annual bonus comprised of cash and deferred shares, and €8.65 million of stock awards under a long-term incentive plan, as the group’s share price and cash-flow surged.

Manifold is consistently the highest-paid Irish executive. His latest package was 24 per cent ahead of what he took home in 2020. But having doubled in value in the three years to the end of 2021, CRH’s stock has fallen by 25 per cent so far this year amid concerns about the global economy.

As CRH is also listed in London, it is obliged by UK law to report on chief executive pay relative to its workers in that market. Mr Manifold’s remuneration was 289 times the median €48,200 pay last year of CRH’s UK employees, who account for 13 per cent of the group’s total workforce. The ratio was up from 207 times in 2019.

The median employee-to-FTSE 100 CEO pay ratio last year was 1:81, according to Deloitte.

Flutter windfall

Flutter Entertainment, parent of Paddy Power bookmakers in Ireland and owner of the biggest US sports betting operator, may have had a pretty torrid 2021, amid uncertainty over gambling regulations in various jurisdictions, a swathe of UK and Irish sports results falling in the favour of customers, and a decline in bets as online punters went out and about more as pandemic restrictions eased.

But its CEO, Peter Jackson, claimed the second-highest spot on the executive compensation table for a second straight year, with an £8.4 million (€9.9 million) package, unchanged from 2020.

Flutter’s move to hike Jackson’s basic salary by 26 per cent this year to £1.17 million drew criticism from influential proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis ahead of the company’s annual general meeting in April. Almost a third of Flutter shareholders voting at the meeting followed the advice of ISS and Glass Lewis and rebelled against the pay hike – and one also extended to the groups’ chief financial officer – against the backdrop of a falling share price.

Group chairman Gary McGann defended the pay increases at its annual general meeting of shareholders, saying Flutter operated in a business where companies compete intensely to lure skilled executives. “Quite frankly, both the executive directors... are at the bottom end of anything that would be available to the equivalent in the US,” he said.

Cardboard box maker Smurfit Kappa’s CEO, Tony Smurfit, saw his remuneration rise by 19 per cent to €6.24 million. A surge in ecommerce and demand for sustainable packaging during the pandemic pushed the company’s earnings to record levels in 2021, even as it faced €657 million of extra costs for recycled cardboard and energy, amid soaring inflation globally.

While Smurfit Kappa reported better-than-expected earnings for the first half of the year on Wednesday, its stock remains down more than 26 per cent so far this year.

Gene Murtagh, CEO of insulation manufacturer Kingspan, saw his pay package jump 74 per cent last year to €5.74 million. Some 20 per of shareholders voted at its agm – on the advice of ISS – against a plan to increase future potential awards under a long-term incentive plan (LTIP) by 50 per cent to 300 per cent of basic salary.

The outgoing head of Dublin-based but London-listed Grafton Group, Gavin Slark, completed the list of the top five earners last year, with his compensation package soaring 149 per cent – the most of the 18 CEOs – to £3.28 million (€3.88 million), as his LTIP awards tripled to £1.77 million.

115% pay rise

Michael Stanley, CEO of housebuilder Cairn Homes, enjoyed the second-fastest pay growth last year, with it jumping 115 per cent to €1.12 million. It came as he was included – against the wishes of a quarter of shareholders voting at the company’s 2021 agm – in a long-term share bonus plan last year, ahead of schedule, after it became clear that Cairn’s share price would not reach the levels needed to trigger the final element of an otherwise highly lucrative stock incentive scheme tied to its initial public offering (IPO) in 2015.

AIB CEO Colin Hunt book-ended the list of 18 executives with his €600,000 package, including a €100,000 of pension contribution. His pay remains capped at €500,000, and bonuses continue to be subject to an effective ban across domestic banks that were rescued post the 2008 financial crash. The ratio of Hunt’s pay relative to the median of all other to employees at the bank was less than 10:1.

The remuneration of Bank of Ireland’s chief Francesca McDonagh remained unchanged at €960,000 in her final full year at the helm of the bank. The British banker is due to step down next month, after five years in charge, to take on a senior role with Credit Suisse, where, according to the Financial Times, she can expect to at least double her pay.

McDonagh and her chairman Patrick Kennedy had been vocal in recent years about how difficult it was for the bank to attract and retain top executives amid the ongoing ban on variable pay in the industry.

Elsewhere, Margaret Sweeney, CEO of Ires Reit, the State’s biggest private residential landlord, is set to follow up a 63 per cent increase in her total remuneration last year, to €1.06 million, with a 38 per cent increase in her basic salary this year, to €550,000.

Ires, the only real-estate investment trust (Reit) still on the Dublin market after three other Reits were taken private in recent years, partly justified the salary boost on the fact that the company has just moved in-house the asset and property management of its portfolio of over than 3,900 apartments and houses.

O’Leary incentive

The beneficiary of potentially the most lucrative incentive scheme in the Irish market is Michael O’Leary, the long-standing head of Ryanair.

While O’Leary signed a five-year contract in early 2019 that cut his annual base pay and maximum bonus each in half to €500,000, it also included options to buy 10 million Ryanair shares at €11.12 each if its net profit topped €2 billion in any of the years, or if its share price exceeds €21 for a period of 28 days between April of this year and March 2024.

Ryanair last reported an annual profit – of €1 billion – in its financial year to March 2020, just as Covid was sweeping the globe. Its shares are currently changing hands at about €12.60. Ryanair has been booking an annual €1.78 million non-tax charge in recent years to spread out the potential cost of the award. Including this resulted in O’Leary’s compensation package for the financial year just passed amounting to €2.76 million.

O’Leary told analysts in May that he was “cautiously optimistic” that Ryanair would hit one of the two targets tied to the options. “If I don’t get there, well then shareholders have had the benefit of my leadership at a deeply discounted rate for the last three years,” he said.

The highest-paid newcomer to the Irish CEO club in recent times is Tomás O’Midheach, who took over the helm of insurer FBD in January 2021. Almost half of his €1.06 million remuneration for his first year in the job was by way of a bonus as the company’s profits soared to €110 million from €4.8 million for the previous 12 months.

Elsewhere, former Iseq 20 stalwart Carl McCann saw a massive bump in his remuneration last year as he took Total Produce, the Fyffes spin-off that floated in Dublin in 2006, off the Irish market last year, merged it with Dole Foods and floated the combined entity, called Dole plc, on the New York Stock Exchange.

McCann, whose compensation as Total Produce’s executive chairman came to €1.06 million in 2020, received a total package of $3.23 million (€3.18 million) at Dublin-based Dole last year. His chief executive, Rory Byrne, received $4.31 million. Both benefited from large cash bonuses and stock awards tied to the completion of the tie-up.

Wall Street

Still, McCann’s bumped-up remuneration isn’t in the ha’penny place compared to some other CEOs of Wall Street-listed companies.

Jeff Green, the CEO and co-founder of The Trade Desk, who’s little-known outside of the digital advertising industry that he inhabits, earned $835 million (€824 million) last year, almost entirely by way of stock awards, to make him the highest paid head of a public company globally.

Zig Serafin, CEO of Utah-based business software company Qualtrics, was the second-highest paid US executive last year, with a compensation package of $541 million (€534 million).

Third spot was taken by Peter Kern, the CEO of travel company Expedia, whose remuneration came to $296 million (€292 million).

A study published last month by executive data firm Equilar of heads of 200 US companies with revenues of more than $1 billion found that the median compensation was $23.3 million in 2021, up almost 30 per cent on the previous year. The so-called CEO Pay Ratio across the 200 companies rose to 298 times the median salary of employees, up from 274 in 2020.

Steve Cutler, the CEO of clinical trials group Icon, was the best-paid head of a Dublin-based, but Nasdaq-listed, company last year, with a compensation package of $9.6 million (€9.4 million).