Existing State bosses unlikely to have cap on their salaries

STATE EXECUTIVES:EXISTING STATE company and agency executives are unlikely to have their salaries capped at €250,000, but Minister for Finance Brian Lenihan said yesterday that he wanted to see this limit imposed in the future.

There has been speculation in recent weeks that the chief executives of State companies such as An Post and the ESB, and agencies such as the Health Service Executive and Science Foundation Ireland, would face pay cuts along with the Taoiseach and other Ministers.

Mr Lenihan pointed out in his Budget speech yesterday that there were contractual difficulties involved in cutting pay for State company and agency chiefs.

However, he added that the Minister for Finance, could use his position as shareholder in State companies to “enforce the objective of the maximum salary within a reasonable timeframe”.

State company executives are not paid out of central funds but by the companies themselves.

A special sub-committee of the board generally sets their salaries and other benefits, and the board as a whole has to approve this. The relevant Minister has to agree to the package.

In the case of Padraig McManus, ESB chief executive, who was paid €752,000 last year, Minister for Energy Eamon Ryan would have approved his pay packet.

Similarly, Minister for Transport Noel Dempsey would have to have approved CIÉ chairman John Lynch’s €252,000 pay packet.

The pay forms part of the contracts between the companies and the executives; any attempt to change it would require a renegotiation of these agreements, which are legally binding.

Chief executives of agencies, such as Cathal Magee of the Health Service Executive, who is paid €320,000, and Fred Barry of the National Roads Authority, who is paid €257,000, are paid directly from the Government’s own coffers.

A Department of Finance spokesman said yesterday that the Minister had the power to cap their pay, but might not be able to do so with existing agency bosses for contractual reasons.

The spokesman added that in the case of State companies, the Minister for Finance can exert influence as the shareholder but cannot directly determine their pay and conditions.

Nine State company chief executives are paid more than €250,000 a year.

Seven of them fall under Mr Ryan’s remit, two under Mr Dempsey’s remit, and one, Jimmy Tolan of the VHI, who was paid €412,000 in 2009, falls under Minister for Health Mary Harney’s remit.

The other top earners in the State sector include Declan Collier of the Dublin Airport Authority, who was paid €568,000 last year, Donal Connell of An Post, who received €500,000, and David Gunning of Coillte, who was paid €489,000.

Bord Gáis chief executive John Mullins was paid €394,000, Gabriel D’Arcy of Bord na Mona received €392,000, and Cathal Goan of RTÉ was paid €326,000.

State companies have a commercial remit, and are expected to trade profitably and return dividends to the exchequer.

The ESB, Bord Gáis and Bord na Mona all paid dividends last year.