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Irish Times
2 days ago
- Business
- Irish Times
Semi-state CEOs: What do they earn and should they be paid more?
In the early part of last year, the then minister for housing Darragh O'Brien received warnings from the boards of three commercial companies under his remit that their operations were facing serious potential difficulties. The chairmen of Gas Networks Ireland (GNI) , Uisce Éireann and the Land Development Agency maintained that government-imposed pay restrictions for their top executives posed 'very real and serious risks' to the work of the organisations. 'The boards of GNI and Uisce Éireann have expressed serious concerns to the minister about the potential loss of the CEO at a critical time for both companies which are significant in scale and complexity', the secretary general of the Department of Housing, Graham Doyle, told a top-level pay review that had been established several months earlier by the cabinet. He told the group that 'the risks associated with these challenges must be fully understood in the context of the concerns being raised by the chairs and their boards and appropriate consideration of mitigating steps to address these risks may be considered as part of your review'. READ MORE [ Eamon Ryan backed higher pay and bonuses to attract best CEOs to commercial State bodies Opens in new window ] It was against this backdrop of such warnings, that the Government in April changed the rules governing pay determination for chief executives in nearly 30 commercial companies owned by the State. Over the coming months boardrooms will look again, under a new system, at how much they should be paying their chief executives. It is clear that many believe that their top executives are not being paid enough, but felt their hands were tied to a large degree by controls that had been in place for 14 years. This led, some boards maintained, to a lopsided pay structure whereby some CEOs earned less than subordinates. Boards and senior figures in their parent departments also expressed concern that CEOs did not receive increments or cost-of-living rises. Performance bonuses, banned since 2011 for most chief executives, were still paid to other executives. This all meant the pay gap between the CEO and others in some companies had narrowed or disappeared completely. Some boards, as O'Brien was warned, feared losing bosses to more lucrative roles elsewhere. Such concerns were not new. For several years a number of boards had been pressing ministers to reform rules governing top-level pay that dated back to the economic crash well over a decade ago. In 2011 the then minister for public expenditure Brendan Howlin introduced, with some exceptions, a general pay cap of €250,000 for chief executives in commercial State companies. There was, he said, in light of the ongoing severe economic conditions facing the country at the time, a need for leadership to be shown by those who held high office across the public sector In the interim, pay rises have been approved for CEOs in such companies on a case-by-case basis. Last year the then government agreed a €50,000 increase for the salary of the new chief executive of EirGrid, the State company that develops, manages and operates the electricity grid, bringing the rate to about €300,000. This followed representations made by the then minister for environment, climate and communications, Eamon Ryan . Figures published generally as part of annual reports show that in several cases pay rates are above the figures set in 2011, but not by a considerable amount. Published figures show that An Post chief executive David McRedmond's total remuneration came to €318,000 in 2023. ESB chief executive Paddy Hayes had a total remuneration package of €372,946. Uisce Éireann chief executive Niall Gleeson had a total package of €276,000 in 2023 while DAA boss Kenny Jacobs 's overall remuneration came to €347,457 in the same year. [ John McManus: Kenny Jacobs's €374,830 salary is a soft target; the problem lies elsewhere Opens in new window ] But there had not been any systematic review of CEO total pay since the Howlin rules were introduced in 2011. Almost exactly 14 years later the current Minister Jack Chambers said a new approach was needed. He said in the coming years many CEOs in commercial State bodies would be required 'to deliver significant projects whilst managing the funding and financing of these projects'. He said fair and appropriate remuneration was a key element in the recruitment and retention of CEOs of commercial State bodies who are critical to the State's future development and economic performance. The Minister said the pay review group had 'concluded that the current system of CEO remuneration and contracts is not optimal in serving the interests of the commercial State bodies, the State or the taxpayer'. Many chief executives can expect to see significant pay rises as the companies move pay towards market rates under new structures put in place. However, there will not be a free-for-all. While boards will receive greater freedom, some rules will still apply. And while the Cabinet agreed to implement most of the 17 recommendations put forward by the Senior Posts Remuneration Committee (SPRC), it did not accept all of them. Chambers said the upper limit on any proposed package would be the market rate rather than 120 per cent of it. He said there would be no backdating of any increases to May 1st of last year, another committee recommendation, and no reintroduction of performance-related bonuses worth up to 25 per cent of salaries, which was also proposed both by the SPRC and by some ministers in the previous government. Chambers said a banded pay structure would be implemented for CEOs ranging from their current salary to the market median of the relevant band. 'In line with the SPRC findings in relation to increased flexibility for boards, the boards will propose a point on the banded salary structure ranging from the current fixed-point salary to the relevant market median.' Ministers will still have to give approval for salary proposals for chief executives in commercial State companies operating in their areas of responsibility and the Department of Public Expenditure will also have to give its consent. Boards may have been arguing for years that they needed to compete on pay to secure top talent, but the cautious approach adopted by Ministers over recent years shows the political nervousness surrounding remuneration at the highest levels of the State sector. The new pay structures can be traced back to March 2022 when then minister for public expenditure Paschal Donohoe established an independent review panel to look at processes for recruiting top management in the public sector and the mechanisms for determining pay and conditions. On foot of its report, the cabinet in March 2024 established the SPRC, chaired by chartered accountant Maeve Carton (who is a governor of The Irish Times Trust) and set as its first priority a review of pay rates of CEOs in commercial State bodies. Analysis carried out by SPRC found in terms of base salary, 20 of the 28 commercial State bodies were below 80 per cent of the market median – equivalent to 68 per cent of market median on average – when it came to remuneration for chief executives. About 15 commercial State companies made submissions to the SPRC. However, the Department of Public Expenditure has refused to release these documents, partly on the grounds that it had 'provided assurances to the relevant parties that sensitive personal information would be treated in confidence'. However, the internal papers of the earlier Independent Review Panel showed a host of commercial State companies wanted greater freedom and flexibility in setting top-level pay rates and believed that arrangements in place since 2011 were too restrictive. Several want to be permitted to reintroduce bonus or performance payments for their chief executives. ESB told the independent panel 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'. It suggested salary ranges that were in place before the crash in 2008 should be reinstated; that there should be an external review of the commercial State sector every three or five years which would place companies in a particular band; and that, internally, the chairman and the board would have the flexibility to set a competitive remuneration package for the chief executive. While the Department of Public Expenditure has contended that individual company submissions to the SPRC are private and off-limits, Carton had sought Ministers to make submissions about CEO pay in companies in their own areas. A number of these submissions provide insights into the thinking of both the boards as well as of Ministers and senior civil servants in their line departments. Many of the State commercial companies come within the transport and energy sectors and Ryan as minister covering both areas in the last government submitted comprehensive documents. Catherine Martin and Stephen Donnelly also made submissions as did Doyle, secretary general at the Department of Housing. The Department of Agriculture also set out its position in relation to pay at Horse Racing Ireland (HRI), Rásaíocht Con Éireann (RCÉ) and the Irish National Stud (INS). The department said it understood that 'difficulties have been experienced by some State bodies in recruitment and/or retention at this level'. It revealed that on receipt of business cases made by the commercial State bodies, it had approved the departure from the 2011 salary ranges for new appointees to CEO posts, for HRI in 2021 and in 2023. The Department of Public Expenditure had given consent in both cases. It said the basic salary levels were: HRI €191,000; RCÉ €160,000 and INS €110,569. Ryan told the SPRC that 12 commercial organisations came under his remit as minister for transport and that some had experienced difficulties in attracting and retaining chief executives. He proposed that there could be one arrangement for agencies that operated in a highly competitive setting and a different approach for those who provided 'more in way of a public service'. 'Given the sector-specific context and diversity in play, a one-size-fits-all approach is not working in attracting talent, particularly when international consideration and comparators are taken into account,' he wrote. Ryan wanted government departments and agencies to have greater freedom to offer more competitive packages, including performance bonuses and increments, when seeking CEOs for commercial State bodies. He also supported more flexibility on the duration of contracts, with an option to extend the time in the role. Ryan's submission also revealed, based on 2023 figures, that at airport operator DAA, three personnel earned more than the CEO , who received €347,457 in total remuneration that year. The submission said this was also the case before the appointment of the current chief executive in 2023. Ryan's Department of Environment, Climate and Communications also said the board of the ESB had 'significant concern' that the salary for company's chief executive was insufficient for retaining an appropriately skilled person for the role. 'The chair of ESB has also noted the current salary as insufficient to attract the calibre of candidate sought for the role in comparison to alternative employment options available to them.' In an appendix to Ryan's submission, last summer, officials said at that point the post of ESB chief executive had a salary of €318,000. The submission said this was also the case before the appointment of the current chief executive in 2023. The then minister for health, Stephen Donnelly, said while some form of policy was necessary regarding chief executive remuneration in the commercial State sector, 'a strong case can be made for those bodies which do not have recourse to the State for funding to be dealt with in a different manner to reflect this'. State-owned health insurer VHI came under Donnelly's remit. The Department of Arts and Media under former minister Catherine Martin backed increasing the €250,000 pay rate for the head of RTÉ, Kevin Bakhurst , as it said it had fallen considerably in real terms due to rising living costs. The department also supported a higher salary for the director general of TG4, which stands at just over €160,000. The department said the salaries attributable to the director general positions in both broadcasters had 'declined significantly in real terms since 2016 and have not taken account of cost-of-living pressures'. Doyle's submission said remuneration for the CEO at GNI and Uisce Éireann included a fixed-base salary of €225,000 with no provision for increments or indexation. The packages also included private health insurance for the CEO, spouse and dependent children. The submission said in both companies there were two employees paid more than the chief executive. It maintained that two executives had left both companies in the previous 12 months.
The Independent
15-05-2025
- Health
- The Independent
Bonuses and pay rises for NHS chiefs ‘reward not a right', says Streeting
The Government will try to lure NHS managers to poor performing areas with a temporary pay increase of up to £45,000 under new plans. Meanwhile, failing chiefs could have their salaries docked by up to £15,000. The so-called 'carrot and stick reforms' will aim to reward leaders slashing waiting times and improving services for patients. Health Secretary Wes Streeting said bonuses and pay rises will be a 'reward and not a right'. Under the measures, bonuses of up to 10% will be on offer for top performers, with vacancies in poor performing areas coming with a temporary uplift of 15%, worth up to £45,000. Pay bands for senior managers will also be overhauled to attract and retain staff. Chief executives that fail to deliver improvements or rack up debt could also have up to £15,000 docked from their pay packet. The figure is based on last year's 5% pay rise and the highest current salary of a trust chief executive under the new framework, which is £299,250. Mr Streeting said: 'Some of the best businesses and most effective organisations across Britain and the world reward their top talent so they can keep on delivering. 'There's no reason why we shouldn't do the same in our NHS. 'We will reward leaders who are cutting waiting times and making sure patients get better services. 'But bonuses and pay rises will be a reward and not a right – because I'm determined that every penny we invest through our Plan for Change is money well spent. 'Our carrot and stick reforms will boost productivity, tackle underperformance and drive up standards for patients.' NHS England chief executive Sir Jim Mackey said linking pay to operational performance happens in 'almost every other sector' and should also happen in the health service. 'If we are to consistently reach the standards of care the public rightly expect, it is clear that we need to reward those who are delivering for patients,' he said. 'An important element of driving improvements must be strengthening the link between pay and operational performance at a very senior level – this happens in almost every other sector and there is no reason for the NHS to shy away from it, particularly when we rely on money that comes directly from taxpayers' pockets. 'We will be working together with local leaders to improve transparency and ensure progress is recognised, while offering sufficient flexibility to attract talented candidates to the most challenging roles and organisations.' The plans come after Mr Streeting pledged to sack failing NHS managers, telling trust leaders in November that there 'will be no more rewards for failure'. Isabel Lawicka, director of policy and strategy, NHS Providers, said pay is an 'important enabler' for the NHS to 'attract and retain talented leaders'. However, she warned there is a risk that withholding pay rises 'could lead to unintended consequences'. 'As ever, the devil will be in the detail. Today's announcement raises a number of questions including how these complex new pay arrangements will be implemented, the decision to link financial turnover to pay and the crucial role of trust boards in this process,' Ms Lawicka said. Patricia Marquis, executive director for the Royal College of Nursing England, added: 'Attracting talent to the NHS is important, but no NHS boss could succeed without us. We are the largest workforce in the health service and deliver the vast majority of care for patients. 'Talk of bonuses for hospital chiefs higher than a nurse's annual salary will leave a sour taste in the mouths of nursing staff. We are still waiting for a pay award that should have arrived six weeks ago. 'Bonuses for the top while cutting nurse numbers is reckless and offensive. This culture was bad for finance and it is not the answer for the NHS.'
Daily Mail
14-05-2025
- Health
- Daily Mail
Failing NHS bosses could have pay docked while top-performers get bonuses worth up to £45,000
NHS managers will have their pay docked if they rack up debts or fail to improve care under new rules aimed at boosting productivity. Meanwhile, the government will try to lure bosses to the worst performing areas with temporary pay rises worth up to £45,000. The 'carrot and stick reforms' aim to reward leaders for slashing waits and improving services - without busting their budgets. Health Secretary Wes Streeting said bonuses and pay rises will be a 'reward and not a right' but bosses last night moaned that some of the measures could be seen as 'punishing NHS leaders'. And the Royal College of Nursing said offering bosses large bonuses while cutting nurse numbers is 'reckless and offensive'. Under the new pay policy, bonuses of up to 10 per cent will be on offer for top performers, with vacancies in poor performing areas coming with a temporary uplift of 15 per cent, worth up to £45,000. Pay bands for senior managers will also be overhauled to attract and retain staff. Chief executives that fail to deliver improvements or keep control of finances could be denied pay rises, worth up to £15,000. The figure is based on last year's 5 per cent pay rise and the highest current salary of a trust chief executive under the new framework, which is £299,250. The new policy will come into effect this financial year. Mr Streeting said: 'Some of the best businesses and most effective organisations across Britain and the world reward their top talent so they can keep on delivering. 'There's no reason why we shouldn't do the same in our NHS. 'We will reward leaders who are cutting waiting times and making sure patients get better services. 'But bonuses and pay rises will be a reward and not a right - because I'm determined that every penny we invest through our Plan for Change is money well spent. 'Our carrot and stick reforms will boost productivity, tackle underperformance and drive-up standards for patients.' Sir Jim Mackey, NHS England Chief Executive, said: 'If we are to consistently reach the standards of care the public rightly expect, it is clear that we need to reward those who are delivering for patients. 'An important element of driving improvements must be strengthening the link between pay and operational performance at a very senior level – this happens in almost every other sector and there is no reason for the NHS to shy away from it, particularly when we rely on money that comes directly from taxpayers' pockets. 'We will be working together with local leaders to improve transparency and ensure progress is recognised, while offering sufficient flexibility to attract talented candidates to the most challenging roles and organisations.' Patricia Marquis, executive director of the Royal College of Nursing, said: 'Attracting talent to the NHS is important, but no NHS boss could succeed without us. 'We are the largest workforce in the health service and deliver the vast majority of care for patients. 'Talk of bonuses for hospital chiefs higher than a nurse's annual salary will leave a sour taste in the mouths of nursing staff. 'We are still waiting for a pay award that should have arrived six weeks ago. 'Bonuses for the top while cutting nurse numbers is reckless and offensive. This culture was bad for finance and it is not the answer for the NHS. 'Despite the vital nature of our work, ministers are once again putting nursing at the back of the queue, with too few staff and poor pay. 'They cannot keep us waiting forever for the significant pay rise we need and deserve.' Matthew Taylor, chief executive of the NHS Confederation, said: 'It is vital that the most talented and best qualified leaders are encouraged and rewarded for turning around the most struggling organisations. 'We therefore welcome the challenged organisation recruitment premium as well as the proposals to recognise exceptional contributions. 'But while we understand there should not be rewards for failure, we are concerned that some of the measures could be seen as punishing NHS leaders. 'The challenges facing NHS organisations can sometimes be due to historic or systemic issues rather than poor leadership.'
