The former chief executive of the Irish Medical Organisation (IMO), George McNeice, maintained in his retirement negotiations with the union last year that for pension purposes, his salary should be considered to be about €720,000, according to highly placed sources.
Mr McNeice’s actual salary at the time was about €493,000. However proposals he had made to the IMO in 2010 regarding a pay freeze and a halt on the payment of bonuses under his contract were conditional on him remaining in his position and would not apply if he left his post.
A confidential letter sent by Mr McNeice to the chair of the IMO’s remuneration committee Prof Joe Barry in April 2010 said that in light of current economic challenges, he was proposing a pay freeze for two years.
He said bonus payments due to him for 2009 and 2010 would not be paid, although the contractual review of his performance would continue to be carried out and any recommendation to pay or not to pay bonuses would be a feature of such assessments.
He also said that any bonus to be paid to him in respect of 2008 would not be consolidated into his future salary.
Under the proposals Mr McNeice also agreed to pay a further 10 per cent of salary into his pension fund, bringing the amount up to 17.5 per cent.
However, the letter maintained that these proposals were strictly conditional.
It said: “If between the signing of this letter and 31 December 2010 my engagement as chief executive officer of the Irish Medical Organisation terminates during my lifetime for any reason, then all the existing terms of my 2004 contract shall apply and all payments and increases due under the 2004 contract shall be reimbursed and paid, including bonus payments and entitlements to pay increases and any pension entitlement, which would have arisen or accrued pursuant to the terms of the 2004 contract.”
Highly placed sources said the proposed measures were subsequently extended until the end of 2012.
However, as Mr McNeice was leaving before then, the organisation faced a potential liability based on a salary of €720,000 which would have applied if the freeze on pay and bonuses had not been put in place.
The IMO has been in turmoil since it emerged before Christmas that Mr McNeice had left the organisation with a retirement package worth €9.7 million.
Members of the Irish Medical Organisation have been told that under a contract the union entered into with Mr McNeice in 2004, potentially it could have had a liability of up to €25 million.
However this figure was reduced to €9.7 million after negotiations.
The controversy over Mr McNeice’s remuneration overshadowed the first day of the IMO’s annual conference in Killarney yesterday.
In his address to the conference, IMO president Dr Paul McKeown criticised Mr McNeice.
He said he was shocked at Mr McNeice’s excessive pay arrangements and disgusted at attempts to justify them.
The Irish Times reported yesterday that a spokesman for Mr McNeice had said the former chief executive believed there was no secrecy about his remuneration package and that it was known to senior figures inthe union.
In his address to the conference, Dr McKeown said: “I was disgusted by comments attributed to a spokesman for the former CEO trying to justify a salary of almost €500,000 a year – before bonuses – on the basis that it was widely known throughout the organisation. I utterly reject that claim.”
Dr McKeown confirmed that the contract with Mr McNeice had been signed on behalf of the IMO by Prof Barry but that he had not been aware of the ramifications of the deal for the organisation.
Dr McKeown said another former IMO president, the late Dr Cormac Macnamara, was the architect of the contract.
The interim senior executive of the Irish Medical Organisation Niall Saul said the organisation faced liquidation if it had had to meet the full potential liability of the contract.
