Foynes Port ordered to pay CEO almost €300,000 in performance-related pay
Posted on 8th September 2022 at 22:43
Court rejects company position that it was precluded from paying the money by stated government pay policy
The High Court has ordered Shannon Foynes Port Company to pay its chief executive €297,863 in outstanding bonuses.
Mr Justice Mark Sanfey granted judgment in favour of chief executive Pat Keating over unpaid bonuses between 2010 and 2017.
He ruled that a failure by the Limerick port company’s directors to use their discretion to pay the bonus constituted “a breach by the company of the contract which has caused damage and loss to Mr Keating”.
If the directors had exercised their discretion in a manner consistent with their fiduciary duty, Mr Justice Sanfey found “they would have authorised payment to Mr Keating of the performance-related pay determined by the remuneration committee to be due to him in the period 2010 to 2016″.
The consistent position of the board from 2010 to 2016 had been that it was in the best interests of the company that the CEO’s performance-related pay (PRP) be discharged, the judge found. It exercised its discretion not to do so “only because of the instructions of the shareholder”.
It was the minister’s position that performance-related pay should not be discharged to CEOs of commercial semi-state companies on the basis of “government policy concerning remuneration and employment”.
“Year after year, the directors expressed their strong wish to discharge Mr Keating’s performance-related pay, which they considered he had earned and which had been ‘awarded’ by the remuneration committee,” Mr Justice Sanfey said, but they felt they could not go against the “clearly expressed wishes of the shareholders”.
The company argued that it was at all material times subject to a directive issued by the minister for transport requiring the port company to comply with Government policy not to pay bonuses to CEOs of commercial state bodies.
Mr Justice Sanfey stated that although the wishes of the minister and the department, expressed in correspondence, were strongly advanced, they were not couched in terms that would constitute them a “directive”.
Mr Justice Sanfey stated that the minister was not a party to the contract between the company and Mr Keating but a shareholder.
“In exercising their discretion not to pay performance-related pay to Mr Keating year upon year, the directors were taking a course of action which they themselves considered was not in the best interests of the company, solely on the basis that this was what the shareholders wanted,” he said.
The written judgment records that, in evidence, Mr Keating said that at the time of accepting the position of CEO, the pay “included, without a question of a shadow of a doubt, PRP and basic salary”.
Mr Keating was appointed interim CEO in 2006 and was appointed to the position in 2008 on a permanent basis.
In evidence, Mr Keating said that he felt that he was “the only person in the room taking a financial hit, and a serious financial hit ... There was no real hardship on anybody else on this matter”.
Mr Keating’s statement of claim stated that his basic remuneration pursuant to a 2010 service agreement was €117,500 annually, and that his remuneration “is significantly less than other members of the port company’s senior management team including the financial controller and company secretary, commercial manager and the port services and engineering manager”.
The claim stated that since 2009 Mr Keating is the only eligible employee of the port company “who has not received any performance payment”.
Share this post: