Shareholders criticise bonuses to Dalata CEO and executives
‘Short-term cash bonuses of 100% of salary far too high,’ says David McCabe
Dalata: Pat McCann got a €470,000 bonus in 2016, just €5,000 less than his basic salary. Deputy chief executives Stephen McNally and Dermot Crowley both received €254,000 extra.
Dalata Hotel Group shareholders criticised bonuses paid to chief executive Pat McCann and his colleagues at the company’s annual general meeting.
Mr McCann got a €470,000 bonus in 2016, just €5,000 less than his basic salary, as part of his overall €1.49 million pay. Deputy chief executives Stephen McNally and Dermot Crowley both received €254,000 extra on top of their €275,000 salaries.
Investors who owned more than a quarter of the Dublin-listed hotel group voted against adopting its remuneration report for 2016, indicating that they were unhappy with the sums paid to executives.
Shareholder David McCabe argued that senior executives should not need short-term bonuses equal to their salaries. He told the board that the emphasis should be on longer-term incentives, which were more in line with shareholders’ interests.
“I really do feel that short-term cash bonuses of 100 per cent of salary is far too high,” he said. Mr McCabe pointed out that the company was trading in a rising market, and suggested that Dalata could have done equally well under any chief executive.
Speaking after the meeting, Mr McCann accepted he was well paid by any standards. “But we did not get our full bonuses in 2016 because we did not meet some of our targets,” he said.
Chairman John Hennessy confirmed this and maintained that the board’s remuneration committee stretched targets to ensure that the company got good value from its management.
Both rejected the argument that Dalata could have achieved the results it did last year, when profits rose 66 per cent to €35 million, under “any” chief executive.
Mr Hennessy told the meeting the board took the opposition to its pay report seriously. “We would be concerned that 25 per cent of people voting would vote against something that the board supports,” he said.
“The whole question of remuneration is one that we take very seriously, but we feel that those who voted against the resolution are not taking the full picture into account.”
Mr Hennessy stressed that the board took a conservative approach to bonuses and explained that results were scrutinised carefully to ensure targets were met before it paid them.
He added that the policy was to pay enough to “attract, motivate and retain the best people”.
Dalata pays its executives a basic salary, cash bonus, pension and a long-term incentive plan through which they get shares in the company. This is structured so that they have to wait five years before receiving the equities.
Margaret Sweeney, chair of the board’s remuneration committee, said it met shareholders with more than of 70 per cent of the group over the last four months. “They have given us lots of valuable insights,” she told the meeting.
Dalata said early on Wednesday that it traded marginally ahead of 2016 during the first four months of this year.