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Decisions on pay rates for semi-State chiefs needed from next government

Government pay policy for senior management viewed as too restrictive by boards of commercial State bodies

Minister for Public Expenditure Paschal Donohoe earlier this year asked the Senior Post Remuneration Committee to examine pay for chief executives in commercial State companies as a priority. Photograph: Stephen Collins /Collins Photos.
Minister for Public Expenditure Paschal Donohoe earlier this year asked the Senior Post Remuneration Committee to examine pay for chief executives in commercial State companies as a priority. Photograph: Stephen Collins /Collins Photos.
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Martin Wall
Thu Oct 24 2024 - 06:00

There has been a growing view within the boards of several commercial State bodies over recent years that Government pay policy for senior management is too restrictive.

In submissions to an independent panel established by the Government in 2022, a host of commercial State companies sought greater freedom and flexibility in setting pay rates for their most senior executives.

Some wanted the reintroduction of bonus or performance payments.

The ESB, for example, argued that to attract and retain the best talent, the company must have “competitive and market-facing remuneration for everyone in the organisation including the chief executive”.

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Health insurer VHI said that it was experiencing “significant risk” in recruiting and retaining staff based on State remuneration restrictions when benchmarked against industry equivalents.

Strict Government controls on the top-level pay in commercial State bodies have been in place for more than a decade. Performance bonuses were banned in 2011 after the economic crash.

Minister for Public Expenditure Paschal Donohoe earlier this year asked the newly established Senior Post Remuneration Committee to examine pay for chief executives in commercial State companies as a priority.

The recommendations of this group are awaited, but in recent months the Government had to address pay at EirGrid following the sudden departure of its chief executive Mark Foley in April.

[ Review of CEO pay in commercial State firms looks at rates in private sector ]

Newly released files show the EirGrid chairman as well as Minister for Environment, Climate and Communications Eamon Ryan made strong representations to have the salary increased for the chief executive post. Ultimately, they needed to secure sanction from Donohoe.

The Government later agreed to add a further €50,000 to the €250,000 salary of the chief executive running the company that develops, manages and operates Ireland’s electricity grid.

On July 17th, Ryan wrote personally to Donohoe asking that he “look favourably” on the request made by EirGrid chairman Brendan Tuohy to Ryan’s department for a higher salary for the post, pointing to the critical role the company plays in the electricity sector and its future role in development offshore wind energy.

The following day Donohoe agreed to a salary of about €300,000.

Pay in the commercial State sector can be a sensitive issue for Ministers, as seen in the RTÉ pay and spending controversies last year.

Key decisions on top-level pay will have to be taken by the next government when the Senior Posts Remuneration Committee publishes its report, including whether bonuses should again be permitted.

The submissions of company boards to the independent panel in 2022 and the representations to Donohoe over the summer show that these organisations believe existing arrangements are inadequate in the modern commercial world.