Scottish Government-owned Ferguson Marine has been criticised for the award of a new wave of executive bonuses in the wake of the ferry-building fiasco with awards reaching over £200,000 in three years.
It has emerged that a total of £86,551 was paid in 2022/23 to executives at Ferguson Marine (Port Glasgow) despite past concerns from the First Minister about the payouts.
David Tydeman, the yard's chief executive received almost £40,000 in bonuses, with a further £47,217 paid to eight other staff.
Ferguson Marine it amounted to 40% of discretionary bonus.
The payouts were part of a performance related bonus scheme aimed at incentivising and retaining staff.
It emerged that despite scrutiny over the bonuses, two recipients who do not have a bonus clause included within their original employment contract were invited to join the scheme for the 2022/23 financial year, by letter in December.
READ MORE: Ferguson Marine fails in bid for millions in future ScotGov support
Audit Scotland said: "Management concluded from consideration of legal advice, that the organisation had an obligation to make the bonus payments based on performance targets met. Management have not yet set individual performance targets for 2023/24 relating to bonus payments.
"FMPG are in discussions with the Scottish Government around the operating model, including pay and conditions, and therefore have postponed setting any outcomes-based measures as these discussions are ongoing.
"Under the current Framework Agreement with Scottish Government, FMPG is not required to comply with all public sector pay and conditions. However, there is an expectation that FMPG’s pay and conditions are broadly consistent with the provisions of Scottish Government Pay Policy.
"Any significant deviations require further approval from the Scottish Government. We would consider that bonus payments represent a significant deviation from this policy.
"While Scottish Government approval was sought, FMPG did not have explicit approval prior to payment."
In June, Ferguson Marine chairman Andrew Miller said controversial bonuses would continue to be paid - despite the First Minister saying that he expected them not to continue.
He said the firm's future was at risk if it does not retain a competitive bonus system.
The bonuses are part of a 17 and a half per cent bonus that is paid to certain members of the management team for performance. The bonus is said to be in two parts, 7.5% to be paid upon delivery of the hull of the Glen Sannox and “a further 10% discretionary element”.
Mr Miller, who is leading the review into the payment structure at the yard, said the bonuses were "retention payments" and that senior managers were legally entitled to them under their employment contracts.
Mr Miller, was quizzed after it was revealed the secret bonus bill to Ferguson Marine management had reached £134,218 over two years, while two long-delayed lifeline ferries Glen Sannox and Glen Rosa are still to be delivered being over five years late with costs expected to quadruple from the original £97m contract.
In April, First Minister Humza Yousaf told the Scottish Parliament that it was "his expectation" that bonuses should not be paid for the 2023/24 financial year.
Mr Miller was asked at the Scottish Parliament's Public Audit Committee whether the First Minister had been forcing his hand to break employment contracts.
At the end of April, the deputy first minister and finance secretary Shona Robison confirmed that the first of two instalments of £23,609 each has already been processed for 2022/23.This first payment was made in [Ferguson Marine's] April 2023 payroll with the second payment of £23,609 due in June, subject to ongoing discussions involving the board chairman Andrew Miller.
But Mr Miller has insisted some sort of bonus scheme should be retained at FMPG in the future for the company to be viable.
The continuing bonus culture came despite an outcry over the over £2000-a-day remuneration, made up of fees and expenses given to Ferguson Marine's previous Scottish Government-appointed turnaround director Tim Hair who left his post in February, last year.
The Scottish Government defended the payments to Mr Hair as being "in the middle of the industry norm".
Auditor General Stephen Boyle has stated his opposition to the bonuses at the company which was rescued from administration by the Scottish Government in 2019. He said it was unclear why they were paid.
Edward Mountain, the Conservative Highlands and Islands MSP who is convener of Holyrood's transport committee said of the latest bonuses: “This is hugely concerning. The board, who didn’t get Government approval for their own bonuses, don’t seem to have any idea of how to take the yard forward. "
Mr Miller said: “Attracting and retaining the highest calibre of people is vitally important to securing the future of the shipyard. Equally, the Remuneration Committee has a duty to ensure that stringent KPIs are met by people in senior roles. A sensible balance must be struck which I believe we have achieved."
He said that Mr Tydeman received only 40% of his “at risk retention element” of his contract "given that key KPIs [key performance indicators] and milestones for delivery of both dual fuel vessels were not met"
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