Michael Creed (Cork North West, Fine Gael)
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Question 60: To ask the Tánaiste and Minister for Finance when he plans to make decisions on the recommendations made to him by consultants in respect of the pay levels of CEOs in commercial State bodies. [29659/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Prior to 1999 the remuneration of chief executive officers of commercial State bodies was set by the relevant Ministers on the basis of recommendations of the Review Body on Higher Remuneration in the Public Sector. In 1998, on foot of recommendations from the Review Body, the Government adopted new arrangements for setting the remuneration of these posts. Management consultants were asked to review the pay of these posts based on comparison with similar posts in the private sector. The recommended rates were approved by the Government in 1999.

Remuneration for CEOs could be set by the boards of their companies within the range of 80% of the median identified by the consultants to the median. In addition, CEOs were eligible to take part in a performance-related pay scheme with maximum bonus not exceeding 25% of salary.

The Government again commissioned management consultants to size the chief executive positions of all the commercial State bodies by reference to comparable positions in the private sector and rank them according to job score. Based on an analysis of rates across the private sector for jobs of comparable size, the consultants identified median rates for the various job score levels. The Government have now considered the conclusions of the report and decided that:

the boards of commercial State companies will be informed of the recommendations of the consultants and the relevant Ministers and the Tánaiste will as appropriate consider proposals in relation to the pay of Chief Executives on the basis of the findings of the Hay Report. Where increased rates on foot of this report come to be applied, these will in due course be published in the annual accounts of the bodies concerned.

the pay of chief executives of commercial State bodies should continue to be fixed within a range running from 80% of the market median identified by Hay to the median.

where higher rates already apply in a limited number of cases, there will be no change to existing rates.

from 2008 the maximum possible annual performance bonus should be increased from 25% to 35% of basic pay reflecting the significant increase in the performance-related element in the remuneration package of private sector chief executives of comparable companies. Of this a minimum of 10% of basic pay should be applied to a multi-annual, e.g. three or four year, bonus scheme related to multi-annual objectives, subject to the overall maximum of 35% of salary per year over the period. The existing conditions governing the operation of performance-related pay schemes for CEOs will continue to apply. These are that the performance criteria for each body should be drawn up by the board in consultation with the relevant Government Department and should have regard to the specific requirements of the appropriate Minister as shareholder. The performance-related system should be implemented by a remuneration committee of the board, which should include a civil servant from the appropriate Department, whether he or she is a member of the board or not, who would represent the Minister's requirements as shareholder. Even following this increase in the maximum potential performance bonus for State company CEOs, performance bonuses of many private sector chief executives will still be considerably higher.