State’s largest dairy co-op publishes details of executive remuneration for the first time
Ornua’s nine top executives shared more than €9 million in pay, bonuses and pension contributions over the last two years.
New accounting rules have obliged Ireland’s largest dairy co-op to publish details of executive pay for the first time.
The group’s latest annual report shows total remuneration for senior executives amounted to €4.4 million in 2015, which included €2.3 million in basic salaries and €1.1 million in performance-related bonuses. This was down from €4.86 million the previous year.
As a co-op, Ornua, formerly the Irish Dairy Board, is not under any obligation to give a breakdown of the individual packages paid to each executive.
Total directors’ fees, spread between 14 individuals, amounted to €509,000 in 2015, up 44 per cent on the €352,000 paid in 2013.
Chief executive Kevin Lane said the co-op, which exports 60 per cent of the State’s total dairy output, had gone further that the rules require by breaking out directors’ fees and performance-related bonuses.
“We have a strong governance story to tell here,” he said, noting the co-op has had independent people examine both executive and director remuneration within the group.
Ornua recently suspended its milk levy as a result of the collapse in dairy prices. The co-op deducts a tariff of 0.14 cent per litre from dairy farmers in return for marketing Irish dairy produce abroad. The levy, equivalent to €350 per farmer, is worth about €6 million annually to the group.
Details of Ornua’s executive pay arrangments came as it published its full-year results, which showed it generated record sales of €2.5 billion last year following the lifting of EU milk quotas.
The co-op, however, said a combination of strong supply and demand weakness had led to a fall in global dairy prices.
“There is an urgent need for global supply constraint and any recovery of demand will be dependent on the Chinese economy, improved oil prices and the lifting of the Russian ban,” it said.
Ornua reported an 18 per cent increase in core earnings (ebitda) for 2015 to €58.8 million. Sales of its leading Kerrygold butter brand hit a record €740 million.
The group has been on a major expansion drive in the last 18 months. It has opened new production facilities in Germany, acquired a dairy plant in Shanghai, developed an innovation hub in Spain and opened offices in South Africa.
The investments are part of a five-year transformation strategy designed to ready the co-op for the post-quota era, which has already been marked by crashing milk prices.
Reflecting its strong performance for 2015, a €14 million annual bonus, up 17 per cent on 2014, was declared to Ornua’s 14,000 members, including a cash element of €10 million.
The group ended the year with net debt position of €17 million, and some €526 million of assets on its balance sheet, up 21 per cent on previous year.
An additional special cash bonus of €15 million was declared from the gain on the disposal of a majority stake in Ornua’s US distribution business, DPI Specialty Foods, in late 2015.
“In the first year following the removal of EU milk quotas and the first year of the Ornua identity, we have delivered growth in existing and new markets,” Mr Lane said.
“ We are confident that, whilst recognising the challenging market conditions that exist, our business will continue to deliver strong returns and growth thereby enhancing value for the farmers we represent.”
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