The chief executive of Eircom, Mr Alfie Kane, was paid too much, according to his former boss, the Minister for Public Enterprise, Ms O'Rourke.
The Minister disagreed with the €1.7 million in bonuses paid to Mr Kane last year and also the incentive scheme that could see him get €2.5 million or more in share options, according to documents released under the Freedom of Information Act.
The revelation underscores the fraught relationship between Ms O'Rourke and Mr Kane both before and after the Telecom Eireann flotation.
They fell out publicly last May when Mr Kane appeared to blame the Minister for losses suffered by shareholders after Eircom's share price dipped below the €3.90 flotation price.
Relations between the two had improved little in the runup to the Eircom annual general on September 14th last year. The Minister appeared unwilling to shake Mr Kane's hand when they met six days before the a.g.m. at the annual conference of the Small Firms' Association.
The day before the SFA conference the Minister called the secretary general of her Department, Mr Brendan Tuohy, into her office to tell him she was voting the Government's remaining shares in Eircom against the long-term incentive scheme. The Government had held on to a small number of shares to meet its commitment to give bonus shares to retail investors who held their shares for one year. A file note prepared by Mr Tuohy, the most senior civil servant in Ms O'Rourke's Department, shows that he advised against the decision.
The secretary general put on record that he had argued that it would "be better if we did not get involved in the a.g.m. as the Government had decided to exit fully from Eircom at the IPO". Mr Tuohy also pointed out that some of the Eircom directors "may conclude that a vote against a resolution by the Minister may be seen as a vote of no confidence in them and the action may impact negatively on the share price of Eircom".
Ms O'Rourke responded that her actions were not a vote of no confidence in the directors as she was dealing only with the incentive scheme which, in her opinion, should not be introduced.
"She also stated that, in her opinion, the chief executive should not be paid the amount proposed to be paid to him for 1999," according to Mr Tuohy's note. Mr Kane's €1.8 million bonus included in the region of €900,000 in respect of work done in 1999 on the Telecom Eireann IPO.
