Executive pay rises accelerate by more than 50% ahead of inflation

Executive pay rises continued to accelerate this year, with top managers enjoying an average salary increase of 6.3 per cent in the 12 months to June, a survey has found.

The gain was more than 50 per cent ahead of the pace of inflation, which climbed 3.9 per cent over the same period, according to the Irish Management Institute (IMI), which polled 5,285 managers at 117 companies in 11 different industries.

The pay increase was substantially greater than the previous year, when executive salaries increased 5.5 per cent.

Managers at head of function level, who report directly to chief executives, received the biggest pay rise this year, at 9.3 per cent.

"The increase in the salaries of executives is towards the higher end of what companies had predicted in the survey last year," said Tom McCarthy, chief executive of IMI. "This would reflect the continued success of the various industrial sectors in Ireland and the high level of performance by our executives."

The booming IT and telecommunications sector rewarded its managers accordingly. Chief executives in this industry earned an average €324,000 in the 12-month period, more than double the €151,900 taken home by their equivalents in the less lucrative semi-state and non-profit organisations.

Those working at head of function level at companies generating annual turnover of €250-€500 million were the best paid in 2006. They received an average salary of €153,675, up from €128,520 a year earlier. Heads of function at organisations turning over less than €25 million a year, however, earned €97,150.

The IMI survey also indicated that more women climbed the corporate ladder this year. While the upper echelons of Irish management are dominated by men, 11 per cent of chief executives are female, compared to just 5 per cent in 2005.

At head of function level, the proportion of female managers climbed to 23 per cent from 20 per cent, while the proportion working in middle management rose to 30 per cent from 25 per cent a year earlier.

Irish executives also fared well this year on bonuses and fringe benefits. More than 90 per cent of the companies polled gave executives a performance-related bonus, while 89 per cent of firms put a company car at their disposal.

However, respondents indicated times may not be so good next year. They expect the average pay rise for executives to fall to 5.1 per cent.

The pay report, which the IMI has issued every year since 1979, is regarded as the most important practical source of executive salary information in Ireland.