About 16 semi-state company chief executives are likely to benefit significantly from a Government decision to link their remuneration packages to rates in the private sector.
Rates comparable to private sector norms are to be negotiated for the chief executives in talks between the companies, the Government ministers to whom they report, and the Minister for Finance.
The Minister for Finance, Mr McCreevy, yesterday announced that the Government had approved a new approach whereby pay rates would be fixed by reference to a study of comparable private-sector remuneration levels.
Sharp salary rises are likely to result for such chief executives as Mr Michael McDonnell at CIE, Mr Ken O'Hara at ESB, Mr John Burke at Aer Rianta, Mr Philip Cronin at Bord Gais, Mr John Hynes at An Post and Mr Bob Collins at RTE.
However, the more flexible arrangement will only be available to chief executives who agree to rolling annual contracts with "demanding objectives and searching performance reviews" and performance-related pay which may replace existing annual bonus schemes but which along with bonuses must have an overall limit of 25 per cent of annual salary. The details of individual remuneration packages will be published in annual reports.
The chief executives of Telecom Eireann, Aer Lingus, ICCBank, the VHI, Bord na Mona and ACCBank already have special contract arrangements. Those which remain in the semi-state sector may, if they choose, take up the new arrangement. There are in all about 21 commercial State companies.
A pay consultant engaged by the Minister for Finance in March 1998 has taken each commercial State company and examined the remuneration levels of chief executives in comparable private sector companies.
The consultant, Hay Consultants, then identified the median package for each group of companies, and recommended that this be the maximum rate payable to the relevant public sector chief executive.
It is this figure which in each case will be central to the discussions now being initiated between company boards, the minister they report to, and the Minister for Finance.
The median rates are not being disclosed. But in the cases of CIE and ESB, where maximum potential pay with bonus is now £115,000, the maximum is likely to rise to at least £200,000.
A system for setting the remuneration rates for chief executives of commercial semi-state companies has been in gestation since February 1997, when the Review Body on Higher Remuneration in the Public Sector reported and recommended a new system for establishing pay rates.
In March 1998 the Government decided to engage Hay Consultants to evaluate the "size" of the chief executive positions of all the commercial bodies and rank them according to job score.
It then, on the basis of an analysis across the private sector, suggested appropriate remuneration rates to the Minister for Finance. Hay Consultants submitted its report in July 1998.
Yesterday's announcement follows Government consideration of the report.
Companies which opt for the new system will no longer be included in the work of the Review Body on Higher Remuneration in the Public Sector.
