WHEN Eddie O'Connor takes his seat in the Bord na Mona boardroom today, he will know that the meeting will have a crucial bearing on his future within the company. At the very least he can expect to have to field some very tough questions on the pay, benefits and expenses he has received since 1987. The chairman of Bord na Mona, Mr Pat Dineen, is expected to seek a resolution of the controversy over Dr O'Connor's pay which has rumbled on for the best part of two months. Mr Dineen will make it clear that Dr O'Connor has been given every opportunity to explain his package, which clearly breaches Government guidelines. Dr O'Connor's job is now on the line if he explanation does not satisfy his board colleagues.
Dr O'Connor maintains he bad a perfectly valid deal, which was agreed with the previous chairman of Bord na Mona, Mr Brendan Halligan. Dr O'Connor points out that on his appointment in 1987 Mr Halligan was mandated by the board to negotiate terms with him and to keep them confidential.
The board has yet to be persuaded by Dr O'Connor's claims and Mr Dineen says he is to meet Mr Halligan to confirm evidence of such an agreement.
The arrangement between Dr O'Connor and Mr Halligan was unacceptable to Mr Dineen after he took over as chairman last September. It was Mr Dineen's refusal to accept the status quo that set in motion the events that led to today's board meeting.
Shortly after being appointed, Mr Dineen ordered a report on Dr O'Connor's remuneration covering the last three years. It showed that Dr O'Connor received between £150,000 and £200,000 a year in total.
Over the three years he received expenses of £141,000 of which £39,000 was without receipt.
The board subsequently sought a second report from Price Waterhouse setting out Dr O'Connor's remuneration package for the last nine years. That report is understood to show that his salary, plus bonuses, pension contributions and expenses came to £1.865 million. Dr O'Connor maintains that all elements of this package were agreed with Mr Halligan. He also maintains that the second Price Waterhouse report has given a misleading impression of the benefits to him of the package received over the last nine years. Dr O'Connor says that the inclusion of his business expenses was outside the terms of reference given to Price Waterhouse and this is now a key argument between Dr O'Connor and the board. The gross figure reached by the accountants includes his pension contributions and also his business related expenses. His top up pension contributions were over £500,000 and his expenses and other benefits came to £585,000.
According to Dr O'Connor, his salary, bonus and personal and unvouched expenses came to no more than £750,000.
It is for the board to judge whether the expenses received by Dr O'Connor were appropriate for the chief executive of a state company and to examine the way the expenses were drawn. It is also for it to decide if it was appropriate for the managing director to receive beneficial payments through expenses.
Dr O'Connor has pointed to his record to justify his remuneration package.
When he joined Bord na Mona in 1987, the company was the Cinderella of the state sector. It employed 4,200 staff and was making losses of £16 million. The company is now making profits of around £20 million with only 1,800 employees.
There is no doubt that Bord na Mona was turned around under Dr O'Connor. Also to his credit is that he did it without the major industrial relations problems that would be thought inevitable for any state company seeking to cut its workforce by half.
The key to the redundancy programme which was central to the restructuring was the development of an enterprise scheme under which Bord na Mona workers were encouraged to give up their full time jobs and work for themselves under contract to Bord na Mona.
The group was also reorganised into four focused divisions Peat Energy, Horticulture, Fuels and Environmental. Bord na Mona was also decentralised with its headquarters being moved to Newbridge.
Dr O'Connor also brought in key management from outside the state sector. John Hourican was hired as director of finance from Wavin Ireland and Kyran Hurley was brought in from Ascon to lead the new fuels and environmental divisions.
Another major plank of Dr O'Connor's strategy was to try and grow the company as fast as possible, which was done through the acquisition of horticultural products companies in France and elsewhere. Most recently it bought the solid fuel company CDL.
Dr O'Connor's expansion plans periodically brought him into conflict with Department of Transport Energy and Communications, which was cautious about any extension of the company's remit. However, the agreement of the Government last year to inject £127 million into Bord na Mona, now being investigated by the EU, was acknowledgment of Dr O'Connor's achievements. The Government's vote of confidence in the company meant that Bord na Mona had reached the stage where it could go to the market for money.
Top of Dr O'Connor's agenda is Europeat, the project to build a large peat burning power station in the midlands that would provide a market for milled peat, the company's single largest product. The Government is now in the process of appointing consultants to organise the competition for the construction and operation of the plant. Dr O'Connor's achievements are something he can feel proud of and obviously does. He maintains that over the last 10 years only three Irish companies have achieved more in terms of profitability Kerry Group, Smurfit and CRH.
What should become apparent today is the extent to which the other directors accept his arguments and if he has managed to retain their confidence.
