Revealed: What Ireland's top business bosses are paid

The 14 long-standing bosses of Ireland's largest public companies received a 3 per cent pay rise last year to an average of €1.927 million, according to figures compiled by The Irish Times.

While the rate of increase is only a third of the 10 per cent enjoyed by chief executives of London-quoted FTSE 100 companies, it masks massive boosts enjoyed by some chief executives in Dublin.

Albert Manifold, chief executive of building materials giant CRH, the largest company on Ireland's Iseq 20 index, topped the high earners' list last year with a total remuneration of €5.53 million. It marked a 32 per cent rise on the previous year, driven by a trebling of an award under a long-term incentive plan.

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Eamonn Rothwell CEO Irish Continental Group

While the increase was broadly in line with a surge in the group’s operating profits last year, Manifold’s compensation – including pensions and bonuses – was 87 times more than the average €63,516 cost of the company’s 78,106 employees last year.

The company completed its biggest deal to date in 2015 – the €6.5 billion purchase of assets offloaded by European rivals and Holcim as part of their own merger – and also managed to get a new bonus plan over the line at a shareholder meeting, despite strong opposition from 40 per cent of investors.

Under the new plan, Manifold could earn an annual bonus of more than €8 million in the coming years – equivalent to a maximum annual bonus payment of up to 225 per cent of his salary and a share award of up to 365 per cent of pay.

Defending his compensation at the time, Manifold said it was based on onerous performance targets.

“If I were to achieve a large portion of that potential compensation package, it would only be in the case whereby shareholders would themselves achieve superior returns on their investment in CRH,” he said at the time.

Kerry compensation

Kerry Group boss Stan McCarthy's $4.62 million (€4 million) remuneration last year comes second both in size and in terms of the gap with the average cost per employee last year. His package stood at almost 84 times that of employees of the group. As is the case with CRH, Kerry has significant operations outside of Europe, where labour costs are the highest in the world.

Still, Manifold and McCarthy’s compensation each stands at less than 0.03 per cent of the market value of the companies they run. The most expensive of the 14 long-standing Irish bosses by this measure is Fyffes’ executive chairman, David McCann.

McCann, the fruit importer’s top executive for the past two decades, saw his pay remain unchanged at €1.25 million last year even as earnings before tax, depreciation and amortisation rose 14 per cent.

However, his most recent remuneration package equates to almost 0.3 per cent of the group’s market capitalisation. The cost of Fyffes’ 2,769 employees last year averaged €32,322 – one of the lowest on the Iseq 20. This reflects the fact that much of its operations are based in Central and South America, where pay levels have been subject to criticism locally.

Eamonn Rothwell, head of Irish Continental Group for almost a quarter of a century, is the second-best remunerated chief executive on the Iseq 20 as a proportion of the ferry operator's market capitalisation, at more than 0.25 per cent.

Rothwell received a 39 per cent bump in his remuneration last year, to €2.2 million. But as a major shareholder, his real payday was the €2.9 million of dividends paid out on his 14.8 per cent stake in the group as a result of last year’s earnings.

Food package

The biggest compensation drop last year was for the chief executive of Swiss-based but Irish-run Aryzta, Owen Killian. In the year to July 2015, the head of the food group saw his total package slump 70 per cent to €1.857 million as he received no bonus amid a drop in underlying profits.

Shares in the group have slumped 23 per cent in the past year amid weak trading, particularly in North America, where McDonalds, Subway and Burger King are among its blue-chip clients. A leading shareholder advisory firm, Manifest, has criticised Killian’s pay in the past as being “excessive”.

His package for the financial year just ended isn’t expected until October.

Still, none of the most recent round of compensation comes close to the €7.2 million received by the chart-topping former chief of Smurfit Kappa, Gary McGann, in 2014. That included more than €3 million in share awards. For his last eight months in office, to the end of August last year, he received less than half that amount.

Assessing pay packages is not straight forward across the Iseq 20, since real-estate investment trusts floated on the market in recent years.

Green Reit, whose property portfolio includes the Central Park office-to-apartments development in Leopardstown in Dublin, doesn't pay its chief executive, Pat Gunne. Instead, he is remunerated by the company's investment manager, Green Property Reit Ventures, which received a €20.9 million "performance fee" for the year to the end of June, 2015.

Rival Hibernia Reit, headed by Kevin Nowlan, decided last year to "internalise" management of the company. This resulted in the Reit paying an initial consideration of €21.1 million to the owners of the investment manager, Nowlan Property Limited. In future, we should see Nowlan's remuneration outlined in the company's annual report.

British comparison

Still, the awards received by top Irish bosses pale compared to some of the packages on the other side of the Irish Sea, where the new UK prime minister Theresa May’s successful campaign to lead the Conservative Party was partly fought on a vow to reform corporate boardrooms.

May has promised to make shareholder votes on pay binding, rather than advisory, and has called for all publicly quoted companies to publish the ratio between chief executive and average worker pay. She has also pledged that employees would win a seat in the boardroom alongside company directors.

Martin Sorrell, chief executive of British advertising group WPP, topped the FTSE 100 table for a second year running when he received £70 million (€81.4 million) in 2015, one of the biggest annual awards in UK corporate history.

Tony Pidgley, the founder and chairman of British house-builder Berkeley, took second place, with a £23 million package, helped by share options granted in 2009, at the height of the financial crisis.

All fall well short, however, of the jaw-dropping $329.7 million (€295.8 million) pay package received last year by Patrick Soon-Shiong, chief executive of San Diego-based biotechnology NantKwest, which floated on the Nasdaq last year.

The physician is best known for performing the world’s first pig-to-human cell transplant to treat diabetes and buying a stake in the Los Angeles Lakers basketball team in 2010, using some of the fortune he made from the sale of two drug companies.

However, a slump in NantKwest’s share price this year has seen the value of his stock-based package plummet. It’s now worth a mere $123 million.

Bank bosses: bottom of the pile

Irish bankers, once among the top-paid chief executives of public companies, have been languishing in recent years at the bottom of the pile. Their luck isn’t set to change any time soon.

After guaranteeing the banking sector in 2008, the government of the day moved within months to cap the pay of most chief executives at €500,000 and scrapped bonuses entirely. Bank of Ireland boss Richie Boucher has been able to get around this, with his basic salary set at €690,000 a year in line with recommendations of a government-commissioned report in early 2009 and as the group is alone among bailed-out banks in managing to escape State control during the crisis.

Adding in pension contributions, his total remuneration came to €961,000 last year. That was up 14 per cent on 2014 as that year he elected to waive €118,000 of his salary, but last year he only waived €17,000. The company highlights in its annual report that remuneration restrictions “may adversely impact” the group’s ability to attract and retain “high calibre” people.

Technically, the Government ban on bonuses can continue as long as lenders have bonds and deposits guaranteed by the state. As of the end of April, that figure was still €2.5 billion across the three surviving banks, albeit down 99 per cent from the peak in 2008.

An attempt by AIB’s board to introduce a long-term incentive plan for key executives in early 2014 was met with short shrift by Minster for Finance Michael Noonan. “The answer is, ‘Sorry guys, much better performance required before we’ll even consider (bonuses)’,’’ he said at the time.

Former AIB chief executive David Duffy told ‘The Irish Times’ in an interview earlier this year that potential investors in an initial public offering (IPO) of bank shares would want to see top management locked into an incentive plan, to show that they have “skin in the game”.

Analysts largely don’t see this happening as the Government prepares to sell a 25 per cent stake in the bank as early as the first half of next year.

“My expectation would have been that had the IPO been this year or early next year that, much like with Permanent TSB’s flotation in 2015, there would be no near term possibility performance incentives,” said Stephen Lyons, an analyst with stockbrokerage Davy.

Executives at the bank have also publicly stated that they have no intention of renegotiating the bonus ban before an IPO.

Another analyst, who declined to be identified, said there had been an expectation last year that Bank of Ireland would seek a nod from the State in 2016 to lead the sector back into bonus plans, but the current political landscape makes this much more difficult.

“We’ve a minority government that will struggle to even get its first Budget over the line,” he said, adding that a return of banker bonuses “is well and truly on the long finger”.

In addition, Bank of Ireland warned late last month that its plans to reinstate dividend payments next year for the first time since 2008 could be hit by the impact of Brexit on its business.

Iseq 20 pay league*

Figures are based on most recent annual reports

CRH

CEO: Albert Manifold

Remuneration: €5.53m, up 32 per cent

Kerry

CEO: Stan McCarthy

Remuneration: $4.62m (€4m), 5.7%

Paddy Power

Former CEO, before Betfair merger: Andy McCue

Remuneration: €3.72m

Smurfit Kappa

CEO: Tony Smurfit (promoted to top job in August 2015)

Remuneration: €3.32m

Ryanair

CEO: Michael O’Leary

Remuneration: €3.2m, up 33%

Irish Continental Group

CEO: Eamonn Rothwell

Remuneration: €2.21m, up 39%

Glanbia

CEO: Siobhan Talbot

Remuneration: €1.889m, up 16%.