Anglo paid bonuses to 17 departing executives

ANGLO IRISH Bank has disclosed that it paid deferred bonuses to 17 senior executives due for previous years when they left the bank between 2005 and 2008.

The bank revealed the deferred bonus payments in its legal proceedings against former chief executive David Drumm.

Deferred bonuses were paid to former director and chief operating officer Tiarnan O’Mahony, and to John Rowan, another former director and one-time chief executive of Anglo’s UK division, when they departed the bank.

The payments were disclosed in legal submissions made by chief executive Mike Aynsley.

Among the other executives to have received deferred bonus payments on their departure were Tom Browne, the former head of Anglo’s Irish lending division, who left in 2007; Jim Springham, the head of London lending for the bank; and former executive Paul Pardy, who left in 2005.

Anglo paid bonuses due for the bank’s performance-in-year over the following three years to ensure senior staff remained at the bank.

In many cases where executives left the bank, Anglo paid deferred bonuses due on their departure.

Mr Aynsley also confirmed that lump sum payments were made to Mr O’Mahony, Mr Rowan and Mr Browne in excess of their annual salary, including benefits, to the date of the termination of their employment on their departure.

Anglo is seeking the repayment of €8.3 million in loans due by Mr Drumm, while he claims Anglo owes him €2.62 million in salary, pension and a deferred bonus payment. He is also demanding damages, including for mental distress.

Mr Drumm is claiming that he is owed €669,300 for non-payment of a deferred bonus due to be paid in December 2009 for the year to September 30th, 2006.

The bank claims that because he resigned in December 2008 he is not entitled to the payment.

The former bank chief claims that his employment was not validly terminated in early 2009.

Details of deferred bonus payments to former executives were sought by Mr Drumm in the proceedings as part of his case to show that such payments had been made to staff on their departure.

Mr Drumm stepped down after it emerged the bank’s chairman Seán FitzPatrick had concealed loans with the bank. Mr FitzPatrick had been temporarily transferring his loans off the bank’s books just before Anglo’s September 30th end-of-year reporting date over eight years, using short-term borrowings from Irish Nationwide Building Society.

The board of Anglo discussed in early February 2009 – three weeks after nationalisation – whether deferred bonuses should be disclosed in the bank’s annual report to be published two weeks later. According to the minutes of the meeting on February 5th, directors said the payments were a “sensitive issue” because of the changes introduced by the Government committee on bankers’ pay.

The Covered Institutions Remuneration Oversight Committee (Ciroc) recommended that bank bonuses not be paid for 2008 or 2009 in light of the bank guarantee issued in September 2008.

Donal O’Connor, Anglo’s then chairman, told the meeting that an aggregate amount for payments to directors – rather than disclosing individual deferred payments – “would give what Ciroc wanted”.

Alan Dukes, one of the Government appointees at Anglo, said the “mandate of Ciroc is not [to] look back” and, referring to the deferred bonuses, said that Ciroc “shouldn’t worry itself with that”.

Anglo’s 2008 annual report did not disclose any deferred bonus payments to directors. The report said no bonuses were awarded to directors in 2008 and that “prior to 2007 a component of the performance bonus award for executive directors was deferred”.