The government is getting tough with state company bosses’ pay rates.
The chief executive of state-backed Dublin Airport Authority (DAA) has backed down in a pay dispute with Transport and Tourism Minister Leo Varadkar.
At the same time Taoiseach (Prime Minister) Enda Kenny has said it is high time for senior figures at state and semi-state levels who have not yet taken their voluntary pay reduction to go ahead and do it.
Meanwhile, DAA chief executive Declan Collier said on Sunday, backing down in his row with Varadkar, that he will not be accepting a performance-related bonus of €106,000 for 2010. He said this was in “light of prevailing national economic circumstances.”
In a DAA annual report published on Friday it was revealed that the board of directors had approved payment of the bonus, but it was deferred with the agreement of Collier until he completes his seven years as chief executive in April 2012.
Collier’s total remuneration for 2010 rose by 7.8% to €612,500. This included a salary of €308,500 and pension contributions and other benefits totaling €182,100.
Varadkar said he was “very dissatisfied” the board had made a provision for a “substantial” performance-related payment for Collier. While he was aware the payment had been deferred, it was clear government policy no performance-related payments should be made in respect of 2010.
A Varadkar spokesman said all of the government’s agencies would be expected to comply with this.
Varadkar met collectively with the chairmen and chief executives of all the state agencies in Dublin Castle shortly after taking office and told them bonuses should not be paid until the government had reviewed the issue in the context of the country’s economic difficulties. DAA senior executives snubbed that Varadkar briefing.
Tension with Varadkar over the bonus payment to Collier is believed to have been one of the reasons why David Dilger stepped down suddenly as DAA chairman on May 13, the same day that he and fellow director Peter Barrett signed off on the company’s accounts for 2010.
When the annual report was published a DAA spokesman said the board felt it was legally obliged to provide for Collier’s payment as it was a potential liability for the company. The award was based on the terms of Collier’s contract.
Varadkar’s department said it was not in his power to sanction or refuse a bonus payment, but as the dispute worsened he said on Saturday that he will sack seven of the 13 members of the DAA board from their lucrative posts at the end of the year by not renewing their contracts.
One of the seven was motor importer Bill Cullen, who is also an RTE television judge on a business entertainment program called The Apprentice.
As the row worsened, Varadkar told the Irish Mail on Sunday that although the last government agreed to renew Collier’s contract, talks on his future remuneration package were yet to begin.
Varadkar added that Collier faced a pay cut of more than 50% of his current total in line with pay caps for new state CEOs introduced last week by Public Expenditure and Reform Minister Brendan Howlin.
Collier remained silent in the dispute over the weekend, but by Sunday evening he informed the government that he will forego the performance-related pay.
That means that the threat made by Varadkar against board members of the DAA will no longer need to be carried out.
Varadkar said in a statement that he welcomed Collier’s decision to forego his 2010 bonus and his acceptance that the terms and conditions of the CEO’s position will be substantially reduced next year.
“I am pleased that Mr. Collier and the DAA board are now complying with the policy of my department, and of the government as a whole,” he said. “Like all sections of society and the economy, the semi-state sector will have to undergo a significant transformation in order to survive and prosper.
The DAA posted a profit of €33.1 million last year, compared with a loss of €13.3 million in 2009.