A GOVERNMENT-appointed committee has recommended that the annual salary of senior bankers be capped at €700,000, according to reliable sources.
The report of the Covered Institution Remuneration Oversight Committee is due to be discussed by the Cabinet today for approval. The committee has set out reforms relating to the pay structures for executives at banks covered by the State’s guarantee scheme.
Sources in Government circles familiar with the report say it has concluded that the remuneration of senior bankers should be brought into line with the salaries of chief executives of similar sized companies in Ireland. Accordingly, it recommends a salary cap in the region of €700,000.
The committee was established on December 8th under the chairmanship of Eddie Sullivan, a former secretary general of the Department of Finance. The other members are former comptroller and auditor general John Purcell and Vivienne Jupp, a senior executive with Accenture.
The committee was asked by Minister for Finance Brian Lenihan to “oversee future remuneration plans for senior executives of the financial institutions”. Its findings have been keenly anticipated in the light of controversies surrounding the salary scales of bank executives.
Departing Bank of Ireland chief executive Brian Goggin was paid a salary of €1.1 million as part of a remuneration package of almost €4 million in the year to March 2007 and €1.15 million salary in a €2.9 million package in the following year. Remuneration includes bonuses, benefits and pension contributions as well as salary.
Comments he made in February to the effect that his pay for this year would be “less than €2 million” resulted in a significant negative public reaction and is believed to have led to his earlier departure from his position.
His AIB counterpart Eugene Sheehy is believed to have reduced his remuneration by over €1 million to €690,000 this year. He also said he will receive no bonuses during his four remaining years as chief executive of the bank.
Mr Sheehy was paid a salary of €860,000 in both 2006 and 2007 out of a total remuneration package of €2.1 million (2007) and €2.4 million (2006).
The two main Opposition parties have called for the salaries of bank chief executives to be capped at €250,000. Fine Gael deputy leader Richard Bruton said bank executives could not retain astronomical salaries and bonuses. Labour deputy leader Joan Burton has said no executive should be paid more than the €250,000 salary of the Minister for Finance.
Elsewhere the governor of the Central Bank John Hurley will appear before an Oireachtas committee today to answer question on the Central Bank’s interaction with the financial regulator.
Michael Moynihan, chair of the Committee on Economic and Regulatory Affairs, said the committee would explore the roles of the bank and the regulator.
“The ‘light-touch’ approach to regulation employed by the supervisory authorities in Ireland has been widely criticised for not stress-testing the sector hard enough and downplaying the risk of rising bad debts on substantial property loans,” he said.
The Dáil will also begin a debate today on a Labour Party motion calling on the Government to produce a national jobs plan to tackle growing unemployment.
Róisín Shortall, the party’s social affairs spokeswoman, said the mechanisms to train and educate the unemployed were no longer capable of dealing with the large numbers on the dole.