Smurfit Kappa slashes directors’ pay by 39%

Executive pay levels at Smurfit Kappa Group declined by nearly 39% last year, amid a shake-up of the group’s management.

The Dublin-headquartered international paper and packaging group’s latest annual report, published yesterday, shows that combined pay for the three-man executive team of Gary McGann, Tony Smurfit and Ian Curley amounted to just shy of €10m in 2015.

This figure was down by nearly 39% on the €16.4m paid out in 2014.

Mr McGann retired as group chief executive at the end of August, with Mr Smurfit being named as his replacement.

The group announced last month that Mr Curley was standing down as chief financial officer following 16 years in the post and will be replaced by Ken Bowles.

As a result of the changes, Mr McGann’s basic salary declined from just over €1.26m in 2014 to €842,000 last year and his total remuneration package fell from €7.2m to just under €3.84m.

Mr Curley’s basic salary remained largely unchanged at €764,000 but his total remuneration dipped from just over €4.2m to €2.84m as he saw significant decreases in his annual cash bonus, pension and other benefits.

Mr Smurfit’s basic salary increased from €893,000 to €963,000 last year, but again a decline in bonus payments and benefits meant his total remuneration narrowed from €4.96m to €3.32m.

The group’s share price was trading at around €22.50 yesterday, up nearly 1% on the previous day’s close.

In the year to date Smurfit Kappa Group’s shares are down around 4.8% but well up on this year’s low of €18.23 and considerably ahead of the €4 they were floundering at in late 2011.

Last month, Smurfit Kappa Group’s share price was boosted 15% on the day it reported a near 60% surge in annual profits and a strong outlook for the current year.

For 2015, the group reported pre-tax profits of €599m; up by 58% on the €378m generated in 2014. Last year’s revenues were up at just over €8.1bn.

The profit growth was largely driven by an exceptionally strong performance in the final three months of the year, with fourth-quarter profits up 230%, year-on-year, to €191m.

Basic earnings per share for the year grew by 63% to 172.6c.

On the back of those results, Smurfit Kappa Group’s management also gave an upbeat outlook for this year on the back of improving corrugated prices.

A 20% rise in final dividend to 48c per share — bringing dividend for the year to 68c, or 23% up on the previous 12 months — reflected the board’s confidence.

“Having established a strong platform for growth over the past few years, we expect to deliver good earnings growth in 2016,” group chief executive Tony Smurfit said in his first annual results briefing as group chief executive.

“While this will, to some extent, be influenced by the broader macro-economic environment, we are confident our current investment initiatives, our geographic diversity, our integrated business model and our strong, free cashflow generation positions us well for 2016 and beyond,” he added.

Merrion Stockbrokers analyst Darren McKinley said those positive results highlighted “management’s capability to make bolt-on acquisitions and drive synergies from existing assets”.

The group spent over €380m last year and delivered cost savings of €75m.

Our 2015 #Annual #Report is published today. Download PDF version https://t.co/9RJoVyeWSF #openthefuture pic.twitter.com/FrLk05nrtR

— Smurfit Westrock (@smurfitkappa) March 23, 2016