Twenty long-standing bosses at the largest Irish publicly-quoted companies saw their pay rise by an average of 6.2 per cent last year, as corporate giants like Flutter and Smurfit Kappa came into their own during the Covid-19 crisis, according to figures compiled by The Irish Times.
However, the median CEO compensation package, which gives a better overall picture by eliminating the distorting effects of outliers in the pay stakes, actually fell by almost 36 per cent to €1.2 million as the pandemic hit sales and earnings and forced companies to seek Government supports.
The figures include CEOs of companies listed on the Iseq 20 index in Dublin and four Irish companies on the FTSE 350 in London, but they exclude Ryanair, which has not yet published its annual report for 2020.
Salary cuts temporary
While a group of bosses, including Kerry Group's Edmond Scanlon, Grafton Group's Gavin Slark, Simon Coveney at Greencore, CRH CEO Albert Manifold and UDG Healthcare head Brendan McAtamney, announced they were taking temporary salary cuts of up to 30 per cent at the outset of the crisis in an effort to be seen to be sharing the pain, almost all returned to their normal salaries after three months.
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Half of the 20 listed companies accepted Government subsidies and supports during the crisis last year, though a number, including CRH, DCC, Kingspan and Smurfit Kappa, repaid what they received as the shock to their finances proved less than originally feared. The repayments, of course, gave remuneration committees greater freedom to pay executive bonuses for the year without fear of public backlash.
Eleven of the businesses abandoned plans to pay dividends to shareholders early last year, though two – Smurfit Kappa and Grafton – reinstated shareholder payments later in the year. UDG and Kingspan were confident enough to return to paying dividends in the early months of this year.
Record remuneration
CRH chief executive Albert Manifold, something of a permanent fixture at the top of the Irish best-paid list, set a new record on the Iseq last year for remuneration. His overall package rose by 20 per cent to €11.2 million, driven by stock-based bonuses even after he waived a quarter of his basic salary for three months at the height of crisis.
It served to widen the gap between Manifold and the average salary of CRH’s 77,000-odd employees, to 186 times from a ratio of 161 for the previous year.
Shareholders have been duly rewarded for sticking with the building materials group through the pandemic. CRH managed to grow earnings last year in its North American business as its European operations struggled with lockdowns. It extended its five-decade history of consistently paying dividends and reinstated a share buyback scheme earlier this year. The stock is up 130 per cent from its March 2020 lows.
Peter Jackson, head of bookmaker Paddy Power's parent group Flutter Entertainment, jumped into second place as he saw his compensation soar by almost 260 per cent to £7.52 million (€8.71 million) last year. It came as he pushed through the business's merger with Canadian peer Stars Group, adding Pokerstars and Skybet to its stable to create the world's biggest gambling business.
Flutter also tightened its grip on US fantasy sports website FanDuel late last year, upping its stake from 57.8 per cent to 95 per cent.
Jackson’s reward hasn’t been without controversy. Institutional Shareholder Services (ISS), an influential advisory firm to large shareholders on corporate governance issues, called on investors to reject the group’s remuneration report at its annual general meeting (agm) in April, taken aback by a 17.5 per cent hike in Jackson’s basic pay, which boosted bonus awards that were calculated off base salary.
ISS noted that Flutter's shares were buoyed as the online gambling sector benefitted from a lack of entertainment options during lockdown, and highlighted that it was "good practice" to phase in significant pay hikes, especially after a large deal.
Flutter, in response, said the increase reflected the transformation in scale and complexity of the group. In the event, 15.5 per cent of shareholders voted against the pay resolution.
Smurfit Kappa CEO Tony Smurfit’s package jumped 43 per cent to €5.26 million, as the cardboard box-maker’s stock rallied from the initial Covid-induced stock market slump early last year to end 2020 up about 11 per cent. The pandemic has fuelled online shopping and a shift by fast-moving consumer-goods companies towards sustainable packaging. Smurfit took advantage of the demand for its stock by raising €660 million in a share sale to accelerate investments.
Donal Murphy, the CEO of Dublin-based FTSE 100 constituent DCC, rounded off the top four, with his compensation package jumping 43 per cent to €3.73 million. The fuel distribution-to-healthcare services conglomerate hiked its dividend for the year to March by 10 per cent after posting better-than-expected operating earnings growth.
Slump in pay
Eamonn Rothwell, Irish Continental Group's CEO of 29 years, endured the biggest remuneration slump on the list, with his total package falling by 69 per cent to €856,000 as the Irish Ferries operator scrapped performance-related pay. The group slid into a €19 million net loss last year from a €60 million profit for 2019 as passenger numbers plummeted amid travel restrictions.
Rothwell, ICG’s largest shareholder, with a 16 per cent stake, was also most affected by a board decision to scrap dividends at the outset of the crisis. Still, Glass Lewis, another shareholder advisory firm, took a swipe at secrecy surrounding Rothwell’s bonus plan ahead of the group’s agm. Some 13 per cent of shareholders who voted at the meeting took its advice and voted against the remuneration resolution.
The pay package of Pat McCann, Dalata Hotel Group’s founding CEO, dropped 58 per cent to €542,000 as the company spiralled into a loss as revenues fell off a cliff amid Covid-19 restrictions. McCann, who plans to retire later this year, spearheaded a €94.4 million share sale last September to help tide the company over.
Greencore chief executive Patrick Coveney endured a 54 per cent drop in his remuneration, to €1.12 million, when variable pay was done away with in the year to September as the UK's largest maker of prepacked sandwiches saw its food-to-go business decimated as workers fled urban offices to set up desks at home. The group also went cap-in-hand to the market last year, raising £90 million (€105 million) in a share sale in November to shore up its finances as it remained in survival mode.
Cairn Homes CEO Michael Stanley’s compensation slid 46 per cent to €520,000 as it was stripped back to basic salary, pension contributions and allowances. Net profit at the housebuilder was down 75 per cent to €12.7 million last year and its share price dropped more than a fifth as home sales declined as a result of temporary site closures.
Over a quarter of shareholders went on to take a stand at the company’s agm in May against a move to include Stanley in a long-term executive share bonus plan this year, ahead of schedule. It follows a weak performance by Cairn shares in recent years, resulting in founding directors missing out on millions of euro worth of shares under a lucrative incentive scheme tied to its June 2015 initial public offering (IPO).
Some 80 per cent of the 100 million founder shares had already converted in the three years following the IPO, but Cairn’s price performance since late 2018 has resulted in no subsequent founder-share conversions. Shares would have to rally strongly from current levels to trigger further conversions, before the scheme’s seven-year lifespan runs out in the middle of next year.
A founder share plan at rival Glenveagh Properties also promised much to its top executives when the company floated in late 2017. While 9 per cent of its founder shares were converted into ordinary shares in 2018, the company has not met the requisite stock performance targets to trigger subsequent conversions.
Glenveagh's latest annual report flagged that it will look to bring remaining founder directors, including CEO Stephen Garvey and executive chairman John Mulcahy, into a long-term incentive plan next year as its founder share scheme runs its natural five-year course.
Shareholder protests
Say on pay may have been the lightning rod for shareholder protests over the past decade, but major institutional investors and their advisers are widening the net as the whole area of environmental, social and governance (ESG) mushrooms.
Kingspan's remuneration report was rejected by almost 37 per cent of shareholders at its agm in April, as Glass Lewis said the insulation group could have been clearer on the exiting terms of former director, Peter Wilson. Wilson announced his retirement last December, just when the UK division of the insulation boards business that he led was at the centre of controversy at an inquiry into the Grenfell Tower disaster in London.
Grafton Group saw a third of voters at its agm the same month vote against the re-election of the chairman of the DIY retailer and builders merchants business, Michael Roney. The mini revolt is believed to have been centred around concerns that only 28 per cent of Grafton's board is female, short of the 33 per cent minimum considered best practice for FTSE 350 companies.
Agm votes on companies’ climate action plans have cropped up internationally in the past year though they have yet to surface as issues at Irish meetings. But it’s only a matter of time.
BlackRock, the world's largest asset manager and a top-three shareholder at CRH, Kerry, Smurfit Kappa, Hibernia, DCC, Bank of Ireland and Grafton, said this week that it is taking a keen interest in "say on climate" resolutions.
“More third-party research will be needed to support investors in assessing companies’ climate action plans,” BlackRock’s investment stewardship (BIS) unit said in a report. “BIS will continue to monitor the development of ‘say on climate’ proposals, and we welcome ongoing progress regarding corporate climate policies, ambitions and targets to manage climate risk.”
Wall Street newbies top global pay league
The remuneration reports on this side of the Atlantic remain fairly tame compared to the United States.
The top dog among publicly-traded CEOs last year was Alex Karp, chief executive of Palantir Technologies, a secretive Colorado-based data-mining company, whose customers range from US government counter-terrorism officials to Wall Street hedge funds.
Karp's compensation package was worth $1.1 billion, driven by share awards and stock options tied to the company's New York Stock Exchange listing last year. His basic salary: $1.1 million.
Stock awards linked to the flotations last year of Doordash, the US online food delivery company, and Opendoor, a home-flipping tech company, saw their respective CEOs – Tony Xu and Eric Wu – complete the top three, according to data compiled by executive data firm Equilar and the New York Times.
Xu’s remuneration was valued at $414 million, while Wu’s came to $370 million.
The top-earning chief of a company founded before the internet was Larry Culp, head of multinational conglomerate General Electric, who took the 11th spot overall, with compensation of $73.2 million.
