Sunday, June 26, 2011

Varadkar’s mettle being tested


The Dublin Airport Authority chief executive’s bonus controversy has profound public interest implications in the quest for national competitiveness and economic recovery.  It is also a test of the mettle of Leo Varadkar, Minister for Transport.

Publicly owned DAA, catered for 22.61 million passengers and achieved revenues of €558.12 million in 2010. The chief executive was awarded a total remuneration package of €612,500.

Privately owned Heathrow Airport catered for 65.7 million passengers and achieved revenues of over €2 billion in 2010. The chief executive was awarded a total remuneration package of €476,580.

Heathrow catered for 290% more passengers than the Irish airports but the chief executive was paid 28.5% less in 2010.

The Board of DAA felt it was legally obliged to provide for this bonus. How can this be reconciled with the Department of Finance guidelines for the remuneration of senior management of commercial state bodies developed by an interdepartmental group of Assistant Secretaries and published in March 2006? These explicitly state that the payment of performance-related pay will be determined by the remuneration committee of the Board of the commercial state body, augmented for this purpose by a civil servant appointed by the appropriate Minister.

Furthermore, the Code of Practice for the Governance of State Bodies demands that Government policy be implemented in relation to the remuneration of chief executives and that remuneration arrangements put in place by a relevant Department, or the Department of Finance, for determining and approving the remuneration of a chief executive must be implemented and adhered to.

How, therefore, could Transport Minister Varadkar be merely ‘very dissatisfied' about this bonus on the date that the DAA annual report is published?

If the Minister’s hands are legally tied with respect to this bonus will he appoint an entirely new board of directors that operates to his satisfaction in line with the mandate from the single shareholder, the State? The public interest demands clarity as well as leadership by example.

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