The Irish Congress of Trade Unions today (March 14) called for a series of major reforms in how executive pay in private Irish companies is determined and structured, including greater transparency in how top pay packages are set, action on bonuses, a higher tax rate on incomes over €1 million and a limit to the number of directorships that can be held.
The recommendations are contained in a newly-published Congress report on the issue: Because We"re Worth It: The Truth About CEO Pay in Ireland
The report finds that while pay of most workers in private companies has seen small increases averaging 2% per week, in recent years there has been "an unrelenting upward trend in executive pay of up to 238%, in some companies."
The Congress report is based on an examination of 21 private companies, most of which are listed on the Irish Stock Exchange. The information on executive pay and bonus packages is taken from the published accounts of the companies. The 21 firms chosen represent 95% of the value of the Irish Stock Exchange.
According to Dr Peter Rigney, one of the report's authors, such an examination of how executive pay and bonuses are set in Ireland and their relationship to the wider economy is long overdue.
"Unlike most other EU countries where executive pay is a matter of public scrutiny and comment, we seem to pay very little attention to the issue here. There is little doubt that this is partially driven by a real lack of transparency on executive pay in this economy.
"A challenge to the composition and fairness of high executive pay is long overdue. After all, it appears that top pay is always affordable, while pay at the lower end is wide open to challenge, be it in terms of the Minimum Wage or the rates set by Joint Labour Committees.
"We believe companies should be required to take into account issues such as financial performance, employee welfare, the environment and consumer satisfaction when deciding on top pay."
"We hope this report will help spark a debate on this and result in real reforms to how the upper echelons of top private companies do business, in Ireland," Mr Rigney said.
Among the recommendations contained in the report are:
- Greater transparency in the setting of top executive pay, with companies setting clear objective criteria relating to financial performance, employee welfare, consumer satisfaction and environmental protection;
- Consider extending the mandate of the Low Pay Commission to monitor the relationship between high and low pay;
- Companies award public contracts would be required to publish more details on pay and bonuses, along the lines set out in the UK's Corporate Governance Code;
- Consideration should be given to capping the relationship between executive pay and bonuses, while shareholder resolutions on pay should be binding;
- Where a significant part of a company's work is carried out by sole traders or agency workers, there should a requirement on companies to report on the payments made in these categories;
- Company boards should be more diverse and representative of workers, investors, women and pension funds;
- A higher rate of tax should apply on incomes over €1 million per annum, with Revenue applying greater scrutiny to non-basic elements of executive pay.
