Paddy Power CEO gets 90% pay rise

THE outgoing chief executive of Paddy Power plc, John O’Reilly, received a pay rise of almost 90% last year, bringing his 2004 pay package to €883,000, up from €466,000.

The company’s annual report for 2004 shows that, for the first time, Paddy Power paid out over €1 billion in winning bets from €1.165bn wagered with the company.

Yesterday, Paddy Power chairman Fintan Drury announced that the board has begun the process of recruiting a new chief executive to replace 54-year-old Mr O’Reilly. A fellow of the Institute of Chartered Accountants in Ireland, Mr O’Reilly is stepping down for “entirely personal reasons.”

Mr Drury said Mr O’Reilly was on a one-year rolling contract and will remain as chief executive until at least the end of 2005.

Mr O’Reilly will leave the company, which he helped to found, as a wealthy man. He stands to make a paper gain of €10.8 million on his 900,000 share options which are exercisable at €1.16, with Paddy Power shares trading at around €13.20. The options remain live up to May 2006. Mr O’Reilly already holds 640,000 shares in the company, valued at €8.4m.

His departure is expected to result in a keenly fought succession race with finance director Ross Ivers, 42, the early favourite before all the runners have been declared.

The annual report shows that Mr Ivers’s gross pay for 2004 was €498,000, up from €373,000 in 2003, a 33.5% rise.

Paddy Power chairman Fintan Drury received fees of €110,000 last year, up from €70,000.

The report shows that Paddy Power employed an average of 1,076 people during 2004, up from 913 a year earlier.

The company spent €38.122m (2003: €30.2m) on wages, pension, social welfare and incentive bonuses in 2004, an average of €35,429.

The report also reveals that the company engages in arms-length hedging activities with company co-founder David Power, 58, who acts as an on-course bookmaker.

“The group engaged in hedging transactions with David Power in his capacity as an on-course bookmaker. In aggregate, bets totalling €15,900 (2003: €18,841) were paid by the group to Richard Power On-Course Bookmakers and that firm placed bets winning €20,289 (2003: winning €36,808) with the group.”

The report also reveals that Paddy Power paid rent of €21,000 (2003: €25,124) and €38,727 (2003: €19,205) during the year for retail properties occupied by the group under long-term leases and owned by Stewart Kenny and David Power respectively. However, as and from October 1, 2004, Stewart Kenny no longer holds an interest in any property leased by the group, the report discloses.