Senior figures involved in running the Central Remedial Clinic believed they needed to strike a retirement deal worth €740,000 with former chief executive Paul Kiely to speed his exit from the charity because of his "unsustainable" pay, The Irish Times has learned.
The level of Mr Kiely's remuneration had become an issue of concern within the CRC and with the Health Service Executive, which was exerting pressure over breaches of its official salary caps, sources said.
Prior to his retirement last year Mr Kiely was on a State salary of €106,900 which was supplemented by the clinic with a further €136,000, resulting in an overall pay package of €240,000. It was felt this needed to be reduced, and contract law prevented the organisation bringing down its element of Mr Kiely’s pay.
It is understood his contract would have brought him up to the retirement age of 65, and sources claimed the CRC would save money if Mr Kiely retired and was replaced with someone on a much reduced salary.
His successor, Brian Conlan, was in receipt of a €125,000 salary until last October, although the salary approved by the HSE was significantly less.
A source with direct knowledge of the process said some members of the board and Mr Kiely, who did not return calls last night, felt “this was becoming an unsustainable position”.
“He was probably about 57-ish. We had to cut a deal if we wanted to change it.” The €740,000 package included a €200,000 tax-free lump sum and a further €273,336 taxable payment.
An administrator's report also said that on top of this "an amount of €268,689 was paid to [pension consultants] Mercer to ensure that Mr Kiely's pension/lump sum benefits would not be less than if Mr Kiely had continued to remain on as chief executive until November 2016." The CRC received advice from Mercers, auditors Ernst and Young and the Irish Pension Trust during this period, which culminated in the agreement of the €742,000 package at a special CRC board meeting last March.
Sent their apologies
Five members of the board – Hamilton Goulding, Hassia Jameson, Jim Nugent, Ailbhe Rice Jones and Martin Walsh – were present, while another four – Vincent Brady, Brian Conlan, David Martin and Pat Ryan – sent their apologies.
The board agreed that the terms of Mr Kiely’s settlement would be confidential and that a legally binding confidentiality agreement would be put in place. “Like all these things, there was a build-up of it [the salary] over many years and then, of course, it hit a level that when you come into a recessionary period . . . the climate changed and we had to change with it,” the source said, adding the deal resulted in “huge savings” in the long term.
“This is where the whole contract of employment issue is the core of this. These people, just take Kiely, he had a contract of employment and I think he would have been entitled to work until he was 65.”
Meanwhile, the Department of Justice confirmed an interim charities regulator will be in place by the end of February.
The decision by Minister for Justice Alan Shatter to fast-track the establishment of the charities watchdog followed the recent CRC revelations.