County Limerick port company boss wins High Court pay award

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Shannon Foynes Port Company chief executive Pat Keating.

THE High Court has ordered Shannon Foynes Port Company (SFPC) to pay its chief executive Pat Keating €297,863 in outstanding performance related pay bonuses.

Mr Justice Mark Sanfrey granted judgement against the company to Mr Keating in respect of unpaid bonuses between 2010 and 2017.

He ruled that a failure by the SFPC directors to use their discretion to pay the bonus constituted a breach of contract which caused damage and loss to Mr Keating.

Mr Justice Sanfrey found that if the directors had exercised their discretion in a manner consistent with their fiduciary duty, “they would have authorised payment to Mr Keating of the Performance Related Pay (PRP) determined by the remuneration committee to be due to him in the period 2010 to 2016″.

He stated that the consistent position of the board from 2010 to 2016 was that it was in the best interests of the company that the chief executives PRP be discharged.

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However, the board exercised its discretion not to discharge Mr Keating’s PRP only because it was the Government’s position that PRP should not be discharged to chief executives of commercial semi-state companies.

Mr Justice Sanfrey commented that “year after year, the directors expressed their strong wish to pay Mr Keating’s PRP, which they considered he had earned and had been awarded by the remuneration committee”.

The judge stated “that the only basis on which the PRP was not awarded was that the directors considered that they could not go against the clearly expressed wishes of the shareholders”.

Mr Justice Sanfrey 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”.

He stated that the policy not to discharge PRP was advocated by the Minister as shareholder of the company.

He added that the Minister was not a party to the contract between the company and Mr Keating.

In his evidence Mr Keating, said that at the time of accepting the position of chief executive, the pay “was only going one way and that pay included, without a question of a shadow of a doubt, PRP and basic salary”.

Mr Keating was appointed interim chef executive in 2006 and was appointed to the position in 2008 on a permanent basis.

For the years 2008 and 2009, Mr Keating’s bonuses were reduced to 17 per cent and 9 per cent respectively. He said that he was prepared to accept a reduction for those years at the request of the shareholders

However, Mr Keating was firm in his assertion that he never accepted that this reduction or non-payment of his PRP would continue indefinitely.

The bonus went unpaid from 2010 and, in 2014, Mr Keating “expressed his utmost dissatisfaction with the lack of progress on resolving his performance pay”.

He said that at the time he felt 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.”

The company argued that it was at all material times subject to a directive issued by the Minister for Transport requiring them to comply with Government Policy not to pay bonuses to chief executives of Commercial State Bodies.

The company cited eight separate letters from Ministers and senior department officials on the issue of non-payment of bonuses to the chief executive from 2009 and 2018.

In cross examination, Mr Keating did not accept that letters in 2011 from the secretary general and from Minister Leo Varadkar articulated a clear government policy.

Mr Keating’s basic remuneration pursuant to a 2010 service agreement was €117,500 per annum, 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, Port Services and Engineering Manager”.

The claim stated that since 2009 Mr Keating was the only eligible employee of the Port Company “who has not received any performance payment”.

Chairman of Shannon Foynes Port Company from 2012 to 2016, Michael Collins wanted to pay the bonus payment to Mr Keating.

He said “…it wasn’t until maybe two years into my five years that I certainly felt for the first time seriously that we were not going to get very far with the Department. We tried a few different guises and so on to make special type payments which we then withdrew at the last minute”.

Mr Collins said that the port company provided for the bonus payment in the annual accounts.

“It’s in the balance sheet today. Because we felt equity and fairness and prevarication by the Government could very well be reversed.”

The port company argued that its decision not to award Mr Keating bonus payments for the years in question was made in accordance with clear and unequivocal government policy and/or under Ministerial directive.