Adare gives a lead towards transparency

At long last one company has been brave enough to burst out of the secrecy mould. Adare Printing, not noted for volunteering extra information, has provided a lead towards more transparency. Its annual report, published last week, took a step in the right direction by giving a broad breakdown of directors' remuneration. Irish companies tend to lump the remuneration as totals.

By publishing the number of directors, the average can be deduced. But this often gives a distorted view. AIB learnt that to its cost in 1995 when figures for 1994 indicated that executive directors were receiving an average increase of £162,500 which brought the average remuneration up to more than £600,000. It transpired that Jerry Casey, chief executive of the US subsidiary, received a total of £1.17 million (including pensions) which distorted the averages. Now Adare Printing has partly bitten the bullet. Under the heading corporate governance, it was able to state that the board is "committed to the principles of corporate governance's outlined in the Code of best Practice of the Committee on the Financial Aspects of Corporate Governance (the Cadbury Report) and is satisfied that, in all materials respects (my italics), the company has complied with the recommendations". Cadbury had recommended that the emoluments of the chairman and the highest paid director be disclosed and Adare Printing has now told its shareholders that its highest paid director (Nelson Loane, chief executive) received £147,000, that the next highest received between £135,000 and £140,000 and that two other directors received between £120,000 and £125,000 each. The disclosure also indicates that the bulk of the remuneration consists of a £90,000 salary, that pension costs came to £42,000 and the performance related bonus was £15,000. It could have gone a step further and given the basis of the bonus. CRH, noted for its exuberance in providing information does not adhere to the Cadbury guidelines on directors' pay, gives comprehensive details about its incentive schemes which should be a model for other companies to follow. Its last annual report said it complies with all relevant (my italics) provisions of the Cadbury code and with the best practice provisions of the Irish Stock Exchange's requirements on directors' remuneration. It only discloses the average pay for directors. However, the information on incentives is detailed and informative.

Jefferson Smurfit Group does not give such details on bonuses in its annual report. It merely gives a total figure for annual bonuses and for the long-term incentive accrual. And it gives its own reason for not adhering to the Cadbury recommendations on directors' pay thus: "The company has complied throughout the period under review with the Code of best practice published by the Committee on the Financial Aspects of Corporate Governance as applied (my italics) by the Irish Stock Exchange (ISE)."

When the Irish exchange unhinged itself from London it was hoped that the fledging exchange would force companies to give at least as much information as their British counterparts. Indeed, the Irish exchange promised that it would follow London in what it adopted from the even more demanding Greenbury rules - these superseded Cadbury. Sadly it has not. Now the disparity in the information on directors' remuneration, provided by British and Irish companies, has widened further. Greenbury recommended that there should be full disclosure on each director's pay and this has been adopted by British companies. The ISE, however, decided that the disclosures should be aggregated and split between executive and non-executive directors. The difference in disclosure is startling. Virtually all Irish companies just give totals which provide misleading averages. In contrast, British companies tell all. Guinness, for example, lists each director with a breakdown of basic salary, benefits, bonuses, etc. It might be argued that as the Greenbury report was set up by the Confederation of British Industry in response to criticism on excessive payments to directors in the private utility companies in Britain, it should have no relevance here. Also, the Institute of Directors in Ireland has always pointed to the "security consideration" in a small country as Ireland. However, the security excuse does not stand up to scrutiny as the small trader in a cash business, with no published disclosures, is in a much more vulnerable position. Some groups apparently agree. EBS, although not a public company, discloses what its chief executive earns, and Adare is considering going further by adopting Greenbury because it feels the publication of more information makes its British customers and shareholders more comfortable with the company. If the move towards greater transparency is to mean anything, then Irish companies should be less secretive and tell their shareholders, the owners, what their senior managers are paid.