THE Scottish Exhibition & Conference Centre was last night at the centre of a probe into undisclosed bonuses after its biggest shareholder instructed auditors to examine awards of hundreds of thousands of pounds to its chief executive and directors.
Glasgow City Council, which owns 91% of the shares in the SECC, ordered Deloitte to review a system of lucrative pay incentives dating from 2005. Some of the big names who have played the venue since then include Oasis, Bob Dylan, Primal Scream, Dolly Parton, Take That, Pink, Lady Gaga and the Arctic Monkeys. George Michael is due to appear in September.
Despite councillors serving on the board of SEC Ltd, the company which runs the attraction, the council said it only learned of the bonuses in recent weeks, when the SECC declared them to comply with new legislation.
The authority said it expected "more restraint" given the current economic climate. The money for bonuses could have reduced the SECC's reliance on public funding.
Since 2009, it has had more than £30 million in grants to fund expansion plans, and in 2010 the city council was forced to save its sister venue, the new National Hydro Arena, with a £40m bailout after a private developer pulled out.
The SECC said it would co-operate fully with the review, but said incentives were important for hiring and retaining the most talented people.
In 2010-11, the SECC made a post-tax profit of £400,000 on a turnover of £18 million.
New council accounts for 2011-12 show the five top executives at SEC Ltd were awarded bonuses totalling £226,882 last year, equivalent to just over one-third of their combined salaries. The biggest winner was chief executive John Sharkey, awarded £85,500 on top of his basic salary of £190,000, an extra 45%.
The bonuses are of two kinds: "performance-related pay" (PRP) and a "long-term incentive programme" (LTIP), effectively a retention bonus used to reward employees for staying with the firm.
Sharkey's PRP last year was £47,500, or 25% of his salary, and his LTIP was a further £38,000.
The year before, 2010-11, his PRP was £51,000, or 30% of his then salary, and his LTIP £25,500.
Following discussions with the council, Sharkey last week said he would split his latest PRP among the SECC's 132 staff, giving each of them £360. However, he held on to his £38,000 LTIP.
Four other SECC directors were awarded PRP and LTIP bonuses totalling £50,386 and £90,996 last year.
All bonuses were assessed by a remuneration committee chaired by former Aberdeen FC chief executive Keith Wyness and approved by the board.
Cllr Graeme Hendry, leader of the SNP opposition in Glasgow, said: "These bonuses are hard to justify in the current climate. It seems very surprising senior council staff were completely unaware. We need full transparency."
Tory councillor David Meikle called for watchdog Audit Scotland to investigate and said the level of bonuses was "absolutely shocking", adding: "If the SECC can afford to pay these bonuses, perhaps the council's grant should be cut."
Since opening in 1985, the SECC has boosted the city's economy by attracting thousands of conference and concert-goers, and next year the 12,000-seat National Hydro Arena opens on the site, a key venue for the 2014 Commonwealth Games.
SECC chairman Sir Ian Grant said his board adhered to the "very highest standards of corporate governance" and had a "rigorous" rewards policy.
"Our executive team operates in a hugely competitive international market, where the war for talent is ferocious," he said.
"With the chief executive and his team taking on delivery of the £116m Hydro project on top of their existing responsibilities, the board exercised good governance in 2005 by securing their services via a long-term incentive scheme for the duration of this vital, landmark project.
"Their performance has been superb. We recognise we have a duty to ensure value for money in such economically challenging times and we will clearly continue to reflect that in our salary and benefits packages going forward."
A Glasgow City Council spokesman said: "As the major shareholder we expect the SECC to show more restraint in the remuneration of senior staff.
"We have started a review into whether these decisions remain appropriate in the current climate. The review will also make recommendations about what should happen in future."
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