Ornua pay trouble reveals lack of transparency in co-op sector

Ornua, the State’s largest dairy exporter, is said to be aggrieved at the current focus on executive pay within the group.

The disclosure that Ornua paid nine top executives €9.2 million in salaries and bonuses over the past two years has whipped up a storm in farming circles, not dissimilar to the one that engulfed the Irish Farmers’ Association.

However, Ornua insists it is not a members’ organisation like the IFA, and therefore not subject to the same obligations in terms of transparency.

It also said its executive pay levels, while not disclosing them, are line with industry norms, if not below them.

In a statement, Ornua said executive and board remuneration was “performance related and benchmarked against industry peers”.

When the controversy erupted this week, several individuals close to the group were keen to point fingers at Kerry, the State’s largest food group. Kerry pays chief executive Stan McCarthy €4.2 million, which dwarfs the pay of Ornua chief executive Kevin Lane.

However, Kerry generated €612 million in earnings last year, 10 times Ornua’s €59 million. On that metric alone, Mr Lane can consider himself extremely well paid in comparison to his Kerry counterpart.

In addition, the Ornua boss does not have shareholders breathing down his neck, who can fire him if the company or its shares under-perform.

So, instead of bolstering Ornua’s position, the Kerry comparison undermines it.

As a publicly limited company, Kerry is also obliged to publish details of the various remuneration packages given to top executives. This is in contrast to Ornua, which as a co-op is covered by less arduous disclosure rules.

The Ornua group’s latest annual report shows total executive remuneration fell from €4.86 million in 2014 to €4.4 million last year, in part reflecting the collapse in milk prices. The salaries are linked to Ornua’s Purchase Price Index.

In contrast, during the same period Ornua’s 14 directors, most of whom are co-op executives, saw their combined fees for sitting on the board rise from €452,000 to €509,000.

Shrunken income

According to the Irish Creamery Milk Suppliers’ Association, the income of dairy farmers contracted by an average of €35,000 during the same period due to the global downturn.

None of these co-op heads will divulge what they are paid for sitting on the Ornua board, or whether they pocket the money themselves or hand it over to the co-ops.

What the controversy reveals is a complete lack of transparency across the sector.