Former Minister for Transport Eamon 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.
In a letter to a Government-appointed pay-review group last summer, Mr Ryan suggested a two-tier system for determining chief executives’ pay.
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.
Mr Ryan said 12 commercial agencies came under his remit as Minister for Transport. “These agencies have, in the past, had difficulties attracting and retaining CEOs,” he said.
The Senior Posts Remuneration Committee had been asked by Government to examine CEO pay in commercial State companies. Its chairperson, Maeve Carton, had asked ministers for submissions.
Mr Ryan said fixed-term contracts limited the pool of potential candidates as those appointed had to leave after seven years.
“The overall packages would be considered low in comparison to private sector comparable positions and with the lack of job security at the end of the term, limits the position to quite a small candidate pool,” he stated. “The fixed single-term contract is constrained by the Protection of Employees (Fixed -Term Work) Act 2003 and I recognise that the committee is not in a position to resolve this issue. However, consideration to amend the Act in relation to CEOs would be a very beneficial outcome moving forward.”
He said the Department of Public Expenditure did not allow for increments, cost-of-living rises or public service pay awards.
Mr Ryan also said there was no mechanism open to Government departments to work through any disputes, nor were there any levers available “should it be decided it is in the best interest of all for the CEO to exit the contract early”.
He added that the objectives and the level of responsibility associated with the role could change during the term of a CEO due to Government policy evolving. He wrote: “I would like to see a situation where the job could be re-evaluated should substantial changes to the original specification occur during the term of the contract.”
Mr Ryan also said that to compete with private industry, a performance-related award (PRA) element would be welcome. He stated that this could allow flexibility over the course of the term of the CEO in relation to targets and performance.
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He wrote that the PRA would ”be awarded on the basis of clear guidelines outlining the expected outputs including targets and objectives with the explicit consent of the line department through the remuneration committee process.”
Mr Ryan’s letter also stated: “My department has concerns over the current oversight and governance structures which are fixed and slow to move. An example of this is, for instance, no pay rate reviews since 2011. I would like to see a mechanism where there is, of course, central Government oversight but in line with market conditions and changes in the economic environment.”
Last month the Government signalled it would update rules to allow a “market rate” to be paid to chief executives in commercial State companies but ruled out performance-related bonuses.
