EXECUTIVE PAY:SENIOR EXECUTIVES at AIB and the Bank of Ireland are to have their total remuneration packages cut by at least 33 per cent, the Minister for Finance, Brian Lenihan, announced.
He said it was also agreed during the negotiations on the State recapitalisation of the two banks that no performance bonuses would be paid to senior executives.
AIB chief executive Eugene Sheehy got a total remuneration package in 2007 of €2.1 million. His counterpart at the Bank of Ireland, Brian Goggin, who is due to retire shortly, earned approximately €3 million in the year to March 31st, 2008.
Mr Lenihan agreed that in some instances the cut in bonuses would mean executives’ total salary payments would remain unaffected because the 33 per cent reduction in remuneration would be accounted for by the bonus cuts.
However, he said he wanted to see a “definite cap” placed on the remuneration paid to senior bank executives. Asked by reporters if he was going to create an “Obama- type cap”, Mr Lenihan said yes.
He said he was going to write to the committee set up to review remuneration in the banks at the time of the deposit guarantee scheme, saying he wanted such a cap established.
“The Government believes that pay restraint is important in the overall context of the economy and the supports being provided by the taxpayer, and will act accordingly.
“Total remuneration for all senior executives will be reduced by at least 33 per cent. No performance bonuses will be paid to these senior executives, and no salary increases will be made in relation to 2008 and 2009.”
Asked if the banks had resisted during talks the suggestion that remuneration levels for senior executives should be reduced, Mr Lenihan said the negotiations had been “difficult”.
He said the entire court or board of directors of the Bank of Ireland would be resigning and seeking re-election at the bank’s next annual general meeting. Usually one-third of the court resigns and goes forward for re-election.
He said corporate governance arrangements in AIB already provided for all directors to resign and put themselves up for re-election at annual general meetings.
He said the issue of management change at the banks had been discussed during the recapitalisation negotiations, but the issue of the appointment of chief executives was a matter for the boards.
No issue of serious ethical malpractice had emerged from either AIB or the Bank of Ireland. Managerial competence was a matter for the banks’ boards, he said.
He said total property-based loans at the banks were €35 billion, and reports from the banks on their loans would be published shortly. He was also hoping Anglo Irish Bank would give a detailed assessment in its forthcoming annual report.