Irish Executive Salaries 2006: IMI survey shows annual increase of 6.3%

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Irish Executive Salaries 2006: IMI survey shows annual increase of 6.3%
By Finfacts Team
Dec 1, 2006, 10:30

2006 – Executive salary increase on average of 6.3% against inflation of 3.9%, shows a real pay growth of 2.2% (3.3% in 2005)
Planned increase on average of 5.1% for 2007
Managers at Head of Function level received the biggest increase this year with a pay rise of 9.3%. Those at Middle Management level came in second with an average salary increase of 7%
The highest paid CEOs are in the Information Technology, Software and Telecommunications Sector.

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The results of the latest survey of executive salaries in Ireland carried out by the Irish Management Institute (IMI) are contained in the newly published edition of Executive Salaries in Ireland 2006. These show that, on average, managerial salaries increased by 6.3% (in the 12 month period to June 2006). The Consumer Price Index rise for the same period was 3.9% (CSO, June 2006). In the previous survey year (2004 – 2005), the average salary increase was 5.5% compared to the Consumer Price Index rise of 2.2%.

CEOs in Information Technology & Telecommunications earn an average of €324,000 while their equivalent in Semi-state and Not-for-Profit earn an average of €151,900, this year’s survey found.

Based on the responses of companies participating in the survey, the likely percentage increase they will award managers in the coming year indicates an average rise of 5.1%. This ranges from 5.4% for those at Head of Function level to 4% for CEOs. This year’s survey found that 11% of CEOs in the sample are female, compared to just 5% in 2005. 23% of managers at Head of Function level and 30% at Middle Management level are female. Last year’s survey found that 20% of managers at Head of Function and 25% at Middle Management level were female.

The highest average salary increase in 2006 was at Head of Function level, those executives who report directly to the CEO and have overall responsibility for a major area of business activity. Heads of Function working in companies with an annual turnover of between €250 and 500 million were the best paid in 2006, receiving on average a salary of €153,675 compared to €128,520 as observed by the 2005 survey.

Those at the higher end of this scale can expect to command a salary in the region of €167,525, while the median salary for a Head of Function working in a company with a turnover under €25million a year is €97,150. Heads of Function in companies employing between 501 and 1000 workers earned an average of €129,000 in 2006 compared to €124,000 in 2005, with their equivalent in a smaller firm employing less than 50 employees earning €90,530 on average.

Heads of Function in Building & Construction earn an average of €160,000 while their equivalent in Banking, Insurance & Finance earn an average €156,900 with their colleagues at Middle Management level earning €104,000 (the highest of the various sectors).

Classification of data provided is by range of annual turnover, number of employees and sector of economic activity. Within these divisions, executives are classified by function and by one of four levels from chief executive to first line management. There is a section on fringe benefits which provides up-to-date information and comment on pension schemes, bonus schemes, salary reviews, cars and leave entitlements. The salaries and conditions applying to sales representatives are also reviewed.

Discussing the survey, Dr Tom McCarthy, Chief Executive, IMI said: “In 2006 we’ve seen a modest increase in the salaries of executives which is towards the higher end of what companies had predicted in the survey last year. This would reflect the continued success of the various industrial sectors in Ireland and the high level of performance by our executives.”

The IMI survey relates to the salaries of 5,285 managers working in 117 companies across 11 sectors of Irish business.

Other key findings include:

Executives at Head of Function Level in the Building & Construction sector are the best paid at this level, followed by those in Banking & Finance. Managers at Middle Management level in Banking & Finance fare best at this level.
39% of companies carry out their salary reviews in December / January. One fifth do so in April.
90% of responding companies include a performance related bonus as part of their executive remuneration policy. In 60% of cases this is primarily based on personal performance.
16% of companies indicated that they had both a Defined Benefit and Defined Contribution pension scheme in operation at the same time.
89% of companies put a company car at the disposal of their executives, although this does depend on the level of management.
Over a third of CEOs have a budget of between €60,000 and €80,000 to spend on their company car. BMW is the preferred make.
28% of CEOs originate from a background in Engineering while 23% have a background in Finance.