A report by Ireland’s largest workers’ union, the ICTU, indicates that CEOs in Ireland’s largest companies are earning up to 212 times as much as the average workers within their organisations.
‘Because We’re Worth It: The Truth About CEO Pay in Ireland’ is the Irish Congress of Trade Union’s (ICTU) fourth report into working conditions in Ireland, focussing on the developments in CEO-to-typical-worker pay across 26 companies, 20 of which are registered on the Irish Stock Exchange and six Irish-based companies registered on the London Stock Exchange.
The study was done by examining the 2018 accounts of the companies, with figures outlining that CEO total remuneration (basic pay and bonuses) rising from 2017 levels in 11 of the 26 companies. These increases ranged from 9 per cent to 99 per cent. Wages for average full-time workers rose by 2.6 per cent in the same timeframe.
CEO remuneration was close to or above €1 million for 22 of the 26 companies, with the highest being €8.2 million. At the highest disparity between average worker pay and CEO pay, the average worker would have to work for 212 years in order to earn the money their CEO did in 2018. However, this is a reduction on 2017 levels (also the high that year) where an average worker in that company would have had to work 230 years in order to accrue their CEO’s compensation.
Of the companies examined, the range of CEO-to-typical-worker pay was nine to 212 times. Thirteen of the 26 had CEO remuneration that was over 50 times that of their average workers. CEO pay among the 20 companies from the Irish Stock Exchange rose from an average of €1.6 million to €1.87 million in 2018, 41 times that of the average workers in those companies.
The report also cites the World Ultra Wealth Report, compiled by Wealth-X, which provides data on the world’s wealthiest individuals, and its revelation that Ireland has the fifth highest density of ultra-wealthy people in the world, with 421 millionaires per million people. Only Singapore, Luxembourg, Switzerland and Hong Kong ranked higher. Also cited is the Harvard Law School Forum on Corporate Governance and Financial Regulation’s CEO Pay Trends Around the Globe report, which found Ireland to have the second highest median overall CEO compensation when compared with the US, UK, Canada, Europe, France and the Netherlands. Only the Netherlands ranked higher.
Ireland is by no means an outlier in terms of disparate CEO-to-worker pay ratios; a recent study of the top 50 publicly listed companies in the US found that workers there would need to work 1,000 years in order to match their CEO’s annual salaries. Yet, the ICTU points to the positive examples of legislation such as the UK’s Corporate Governance Code and the US’s Dodd-Frank Wall Street Reform and Consumer Protection Act, which require some companies to publish their pay ratios, although this does include the caveat that Dodd-Frank has largely been ineffective “as a result of corporate lobbying”.
ICTU also expresses its disappointment in the Irish Government for having “failed to seize the opportunity to shed more light on directors’ pay policy through the national legislation giving effect” to the new EU Shareholders Rights Directive. The legislation, building on the Directive as a “good first step in pay transparency”, was due to be implemented in June 2019, but its progress seems to have stalled.