Report says gap between CEO pay and Irish worker is widening

A trade union study of executive salaries says the gap between the pay packets of chief executives and those of average workers is widening in most major Irish companies.

The report – Because We're Worth It: The Truth about CEO pay in Ireland – was carried out by the Irish Congress of Trade Unions (Ictu). It documented pay rises for some chief executives of up to 100 per cent between 2015 and 2016, and a near doubling of cash bonuses in some cases.

It also found that bonuses are becoming a bigger proportion of pay for up to half of the top Irish chief executives when compared to their basic pay.

The Ictu study parsed the 2016 pay packets (the most recently available for all) of 20 of the biggest companies listed on the Irish Stock Exchange, seven Irish entities listed in London, and 12 semi-States.

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Average basic chief executive pay, before bonuses, at Irish-listed companies rose 12 per cent in 2016 to €786,250, the report found. Average total pay came in at almost €2.1 million. This was an increase of only about 1 per cent, but total remuneration increased in 16 out of the 27 stock market companies studied.

The report found the gap between top executive pay and that of an average Irish worker widened fastest at CRH, whose chief executive, Albert Manifold's total earnings were almost €10 million in 2016, up 81 per cent.

The report suggested that an Irish worker on the average annual earnings, as defined by the CSO, of almost €37,000 would take 270 years to earn the equivalent of Mr Manifold’s pay, up from 151 years for the the previous year.

The next longest period for an average Irish worker was 121 years for the then chief executive of DCC, Tommy Breen, who it said earned €4.46 million in 2016. This was up from 106 years.

Century

Among the other companies where an Irish worker on average earnings would take more than a century to match the chief executive's pay was Tullow Oil, at 101 years. In total, the "number of years" increased in 15 of the 27 listed Irish companies whose figures were parsed by Ictu.

The trade union umbrella group also found that the basic salaries of the chief executives of Dublin-listed companies are more than €200,000 lower than their counterparts at Irish companies listed in London. It attributed this disparity to the greater focus by UK politicians on executive pay there.

Ictu said Ireland “lags” other countries when it comes to highlighting excessive executive pay.

On average, it says basic pay makes up 47 per cent of an Irish chief executive's pay packet. It found that basic pay, as a proportion of total pay, had risen fastest at Origin Enterprises, from 33 per cent to 71 per cent.

This proportion was just 14 per cent at CRH, where Mr Manifold was paid a basic salary of €1.4 million, which was still the highest on the Iseq. He received a cash bonus of more than €2.3 million, with the rest of his pay made up mostly of share incentive payments.

The lowest basic pay of any chief executive of an Irish company was the €199,000 paid to Jay Bhattacherjee at exploration company Aminex. Mr Bhattacherjee's total remuneration was €335,000, which was also the lowest.

The second lowest basic pay was the €264,000 paid to Brendan Mooney at Northern Ireland IT company Kainos.

Incentives

The report found that the total pay packets, including all bonuses and incentives, increased for 16 out of the 27 companies surveyed. It decreased at 10 companies, including Kerry (from €4.1 million to €3.6 million) and Smurfit Kappa (from €3.3 million to €2.4 million).

The report's authors, senior Ictu officials Peter Rigney and Eileen Sweeney, predicted that the focus on Irish corporate governance standards would heighten following the purchase of the Irish Stock Exchange by Amsterdam-based Euronext.