Donohoe not backing the return of bankers’ bonuses ‘at this stage’

Banking union opposes reintroduction of bonus plan for key executives at AIB

Paschal Donohoe: no commitment to policy changes at this time. Photograph: Collins

Paschal Donohoe: no commitment to policy changes at this time. Photograph: Collins

 

Paschal Donohoe, the Minister for Finance, says he won’t commit to backing the return of bankers’ bonuses at State-controlled AIB “at this stage”, after the Financial Services Union (FSU) called upon him to reject a proposal by the bank.

FSU general secretary, Larry Broderick, said on Sunday it stretched credulity that AIB would be proposing to introduce for key executives a share bonus scheme worth up to 100 per cent of their salaries annually.

“My understanding is that this proposal has to be approved by the Minister for Finance. I would urge Minister Donohoe not to stand over a return to the devalued practices of the past and reject the AIB share option scheme,” he said.

There has been a moratorium on bankers’ bonuses since the sector crashed in late 2008. Instead of rekindling bonuses for top executives, the FSU wants AIB to instead bring in a new pay scheme for all staff, said the union’s senior industrial relations official, Billy Barrett.

“The primary call on any resources should be the front-line staff who have made tremendous sacrifices to bring the bank back from the brink. We will engage constructively in discussions focused on this aim, rather than schemes designed solely for those at the very top,” said Mr Barrett.

In the response to the FSU’s statement, the Department of Finance told The Irish Times: “Minister Donohoe is making no commitment to any changes in policy in this area at this stage and reiterates that all remuneration restrictions remain in place.”

Annual report

The proposed share bonus scheme was outlined last week in AIB’s annual report. It is proposed that from 2019, key executives would receive deferred shares in the bank up to their full salary, which in chief executive Bernard Byrne’s case would be up to his salary cap level of €500,000.

The shares would not be allowed to be cashed in until the State receives back all of its €20.8 billion bailout of AIB. The bank is also proposing that there would be clawbacks built into the five-year bonus scheme if performance was later reversed.

There would be no up-front cash payment, with vesting of 33 per cent annually of the shares awarded occurring on a pro-rata basis between years three and five. The proposed scheme will be put to a non-binding advisory vote of shareholders next month at its agm.

It is believed that the proposal has already been flagged behind the scenes by AIB to the Department of Finance, and that it has yet to receive any official, or unofficial, imprimatur from the Minister that he will back the plan.

AIB declined to make a statement on the matter on Sunday, referring instead to the details of the proposal contained in its annual report.