Coalition breaches salary limit for incoming VHI chief executive

THE GOVERNMENT has for the first time breached the official pay level it set last year for the starting salary for the chief executive of a commercial State company.

The new chief executive of the VHI, John O’Dwyer, is to be paid a salary of €238,727 – nearly €50,000 more than the starting rate for new chief executive officers in the State-owned health insurer which was set out by the Government a year ago.

Announcing the different pay ceilings for new chief executives in 29 commercial State companies last year, the Coalition said that only the chief executive of the ESB would remain above the €250,000 cap, while only four would earn above the €200,000 cap: RTÉ, An Post, the Dublin Airport Authority and CIÉ.

Yesterday Minister for Public Expenditure and Reform Brendan Howlin said the revised VHI rate was approved on foot of a business case presented by Minister for Health James Reilly.

“Last year the Government introduced a salary cap of €250,000 for CEOs of commercial semi-States,” the Department of Public Expenditure and Reform said last night.

“The rate approved [for the VHI] is below this cap. The general starting rate indicated for VHI was €191,014. However, Minister Howlin indicated that a small number of exceptions may be necessary.

“In some limited occasions a higher rate can be paid for a role of substantial importance. On the basis of the particular challenges facing the VHI currently, Minister Howlin acceded to the request made by Minister Reilly on this occasion.”

The State-owned health insurer said Mr O’Dwyer’s remuneration package involved pay of €238,727 with no bonuses.

Former VHI chief executive Jimmy Tolan, who left the company last year, received a basic salary of €411,000 in 2010.

He was also paid performance-related bonuses which amounted to €37,500 for 2008 and 2009.

Former head of marketing and product development at the VHI Declan Moran succeeded him and took up the role of acting chief executive on his existing salary of €240,000, which was approved by the Government. Mr O’Dwyer will take over from Mr Moran on August 1st.

Mr O’Dwyer is working as chief operating officer and executive director of Interamerican, the second-biggest insurer in Greece which belongs to international Dutch insurance group Achmea.

He has also served as managing director of Friends First Life Assurance, director of operations at Bupa Ireland, assistant chief executive of the VHI with responsibility for claims and as non-executive chairman of the board of the National Treatment Purchase Fund.

Chairman of the VHI Bernard Collins said Mr O’Dwyer’s extensive sector and managerial experience would be invaluable in leading the State-owned insurer at a “critical time in its development”.

“A key priority will be to lead VHI Healthcare to achieve authorisation by the Central Bank by 31st December, 2013,” he said.