Quiet man with ear to the ground

This week’s revelation that Aryzta boss Owen Killian was paid a whopping €7m failed to spark an outcry, due in part to the deliberate low-profile enjoyed by the Roscommon man and the Swiss-Irish firm he heads, says Kyran Fitzgerald.

THE public appetite for a squeeze on executive remuneration has never been stronger.

Record levels of unemployment, continuing pay reductions in many sectors and interminable delays in uncovering suspected white-collar crime provide a fertile environment for a public outcry over executive pay.

However, those believing that the revelation this week that the €7 million paid this year to Aryzta chief executive Owen Killian would light the fuse to a controversy were being fanciful.

First of all, a scarce few outside the business world and his home county of Roscommon are familiar with the low-profile Mr Killian, let alone his company with the obscure Latin name — Aryzta.

Also, the location of Aryzta’s headquarters at its remove in Switzerland helped dampen any disquiet in the public mind over the award.

The brief foray from the business pages to the front page this week would have sat uncomfortably with the 58-year old whose pay award makes him the highest paid head of a publicly quoted Irish company.

The payment is reward for presiding over exponential growth at the Irish-Swiss global food giant. Its best known brand in the Irish market is Cuisine de France.

The figure paid to Mr Killian consisted of a basic salary of €1.05m, with the remainder made up of benefits in kind, pension contributions, performance-related bonuses and long-term incentives.

The pay award represented a 350% increase on Mr Killian’s 2010 income of less than €2m and the award came from a bonus-related earnings target, known as long-term incentive programmes, which was met last year.

A company spokesman this week defended the pay award, citing a €1 billion rise in the group’s share value since 2008.

The revelation of Mr Killian’s executive pay was made this week with the publication of Aryzta’s annual report and followed the publication of a strong set of results that showed a 28% rise in group revenues to €3.87bn with pre-tax profits increasing from €253m to €333m.

If anything, Mr Killian’s lavish pay award obscured a tremendous Irish success story in the booming food sector.

Aryzta was created by the merger of the Irish Agriculture Wholesale Society (IAWS) in 2008 with Swiss firm Hiestand and Mr Killian in place as founding chief executive.

A graduate of University College Dublin with a Bachelor of Agricultural Science, Mr Killian served previously as chief executive of the IAWS group since 2003 — he started with the company in the seeds department in 1976 and worked his way up the company.

The Irish influence at Aryzta is very strong, with eight of the 10-member board being Irish.

Under Mr Killian’s leadership, Aryzta’s executive management team — the strong Irish hue includes chief financial officer Patrick McEniff; chief operating officer Hugo Kane; and general consel/company secretary Pat Morrissey — has also benefited from Aryzta’s success with total combined remuneration amounting to €17.9m.

Yesterday, director of research at Bloxham Joe Gill described Mr Killian as “very focused and dynamic. He is very demanding of all those around him. He pushes himself and his team and they are aggressive in the way they have built up the Aryzta business.”

Mr Gill said that Mr Killian’s style can be traced back to the acquisition of Cuisine de France during his time with IAWS.

He said: “This acquisition was very important and transformed the company.”

Mr Gill said that Mr Killian has set some very demanding targets for the business.

In a letter to shareholders in the 2011 annual report, Mr Killian was in bullish form, stating that the 2011 financial year “was one of strong growth for the group”.

The growth in revenues and profits is largely as a result of €1.4bn splurge on Fresh Start Bakeries, Great Kitchens and Maidstone Bakeries that added 30 additional production locations in nine countries.

Mr Killian, along with the board, has set the group ambitious targets — seeking to double its earning base in five years from June 2008.

Mr Killian — who was re-elected to the board last year for three years — says that enhanced diversification from the acquisitions represents an important milestone in reaching that target.

Under Mr Killian’s leadership, Aryzta has not stopped for breath, with the group committing €100m to a number of bolt-on acquisitions in Asia and Britain that will add €78m in revenues in 2012.

In a newspaper interview in 2004 Mr Killian, when talking about acquisitions, said: “There is no book you can pull down off the shelf to tell you how to do it.”

However, such is the rate of acquisition at Aryzta over the past number of years that Mr Killian could pen a book about the subject.

The acquisitions have helped Aryzta to diversify, with 38% of revenue now generated by Aryzta’s Food Europe division and an equal amount generated by the group’s Food North America segment.

Figures supplied by the company underline the growth Mr Killian has presided over with 48 manufacture and 100 distribution centres in 19 countries in Europe, North America, South America, Australia and Japan.

The scale of the growth in the operation is further highlighted by the numbers employed by the group increasing by 35% from 9,350 to 12,638, with staff costs increasing from €411.7m to €580.6m.

The chief executive admits that the Aryzta’s financial year was a challenging one, stating that trading conditions were difficult, but adding that the group performed well, reporting modest underlying growth in most markets over the period.

The company’s shareholders won’t be complaining about Mr Killian’s remuneration with the board set to recommend a final dividend of 45 cent per share at the group’s general meeting on December 1, 2011.

Mr Killian rarely gives in-depth press interviews but, in an event organised by Roscommon County Council, he spoke of his “great emotional attachment” to Roscommon and about the pride he had in the family business at home.

According to Mr Killian, this is where he learned his entrepreneurial skills and his life as a child in Roscommon consisted of work and football.

Co Roscommon’s Fianna Fáil mayor, Cllr Eugene Murphy, said yesterday that “there is a lot of pride in Co Roscommon over what Mr Killian has achieved”.

“We are very proud of what he has achieved and he is an inspiration to others through the entrepreneurial spirit he has shown over the years,” he added.

There are, however, challenges ahead for Mr Killian and Aryzta. According to Mr Gill, Mr Killian faces challenges in the consumer markets in North America and Europe along with the need to de-leverage the group’s balance sheet.

He said: “There is volatility in raw materials such as wheat and bread. The world economy is at a volatile place at the moment and Mr Killian has to navigate his way through that.”

On the €7m remuneration for 2011, Mr Gill said: “It is a lot of money, but was part of the contract entered into between the board and Mr Killian. They are all grown-ups.”

* Aryzta is coined from the Latin noun arista, meaning harvest, or the pinnacle of an ear of wheat.