Irish Government Urged to Address Delayed CEO Pay Reforms

The ongoing debate regarding executive pay for semi-State companies in Ireland is reaching a critical point, as the Government faces mounting pressure to finalize reforms. The Senior Posts Remuneration Committee (SPRC) determined in March that the current compensation structure for chief executives at commercial semi-State organizations is “not optimal” for the State, taxpayers, or the companies involved. Following this assessment, the Government approved a new banded salary structure in April, while maintaining a ban on performance bonuses. Yet, despite these promises of reform, implementation has been sluggish.

The disconnect between policy and practice has significant implications for governance and political accountability. A notable incident that exemplifies this issue occurred with EirGrid, where the departure of chief executive Mark Foley led to ministers approving a €300,000 salary for his successor without adhering to the emerging SPRC framework. This decision not only addressed an immediate recruitment challenge but also set a precedent that other organizations have since attempted to replicate, leading to broader consequences.

Within this evolving landscape, other semi-State entities are experiencing similar difficulties. Gas Networks Ireland has been left without a permanent chief executive following Foley’s exit to EirGrid, and is currently led by an acting executive. Meanwhile, Irish Rail is struggling to attract candidates at the existing salary of €225,000, with reports indicating that one preferred candidate declined an offer, seeking around €300,000 instead.

The challenges posed by the current pay restrictions have also come to light at Bord na Móna. In 2023, the company reported “grossing up” salaries by more than €50,000 to cover taxes on benefits in kind, a practice criticized by officials in the Department of Public Expenditure. Such workarounds underscore a broader issue: the lack of clear and credible guidelines regarding executive compensation.

The uncertainty surrounding salary bands has left organizations tasked with vital public responsibilities in a state of limbo. An Post has expressed urgency in establishing confirmed salary bands to facilitate the recruitment of its chief executive, a sentiment echoed by various bodies in the energy, water, and transport sectors. Each month of delay not only narrows the pool of potential candidates but also raises the risk that policy decisions will be driven by immediate needs rather than long-term strategy.

In the context of economic pressures and potential cutbacks on cost-of-living measures, the optics of substantial salary increases for public sector executives may appear insensitive. Yet, the inability to appoint and retain skilled leaders carries significant costs, which ultimately fall on the public.

The current situation reflects a broader failure in governance, as the Government’s procrastination on this matter has not served the public interest effectively. To rectify this, it is imperative that the Government publishes the salary bands for each relevant entity, along with the comparators used and a timeline for implementation. Progression within these bands should be tied to independently audited outcomes, maintaining the ban on performance bonuses and eliminating bespoke exceptions.

The SPRC has laid the groundwork for a more structured approach to executive compensation in semi-State firms. What remains crucial is the need for consistency and expedience in implementing these reforms. Without these elements, the Irish State risks incurring further political costs due to ongoing improvisation in its approach to executive pay.