Senior management at AIB lose bonuses due to Allfirst debacle
AIB group chief executive, Mr Michael Buckley has had to forgo a bonus of up to €250,000 because of the €789 million fraud at the bank's US subsidiary, Allfirst. Nor were bonuses paid to four other senior directors, including former chief executive, Mr Tom Mulcahy and recently retired Allfirst chairman, Mr Frank Bramble.
In its 2001 annual report to shareholders AIB disclosed that Mr Buckley, who took over as group chief executive in July 2001, received a total package of €685,000. This included a salary of €502,000, fees of €29,000, a €9,000 payment under the bank's profit-sharing scheme, other benefits worth €65,000 and a pension contribution of €80,000. Mr Buckley was also granted options over 80,000 AIB shares to be exercised at €12.40.
Under the performance-related incentive scheme offered to senior AIB management, Mr Buckley could have been entitled to a bonus of up to 50 per cent of his €502,000 salary, or €250,000 last year that would have swelled his package to €935,000.
This bonus is awarded at the discretion of the bank's remuneration committee and is based on the achievement of a set of targets including the attainment of specified growth in profits. The fraud wiped out 56.3 per cent of AIB's profits in 2001.
Allfirst chairman, Mr Frank Bramble, who announced his retirement at the end of March and left the bank at the end of April, was paid the highest remuneration package amongst the senior executive team.
In 2001 his payment totalled €1.48 million and included fees of €29,000, salary of €811,000, benefits worth €21,000 and pension contributions of €619,000. Mr Bramble forfeited his bonus which could have been worth up to €1.3 million or 160 per cent of his salary under his contract of employment. He was also paid a lump sum of $2.9 million (€3.18 million) as part of the deal he brokered with AIB when he announced he would retire early. He also accepted a reduced pension payment of about $6,000 per month. Mr Bramble is understood to have commuted a pension of about $60,000 a month in favour of the up-front cash sum. The Baltimore-based executive has options over 1.3 million AIB shares which can be exercised at $11.23 per share.
The bank would not comment on whether other executives who are not on the board of directors forfeited their bonus.
Mr Buckley has stated that employees in the branch banking division in Ireland would not be affected. Staff in Allfirst, including chief executive, Ms Susan Keating, would have had their bonuses cancelled. In 2000, Ms Keating was paid a bonus of $336,000 on top of a salary of $600,000. Her salary in 2001 has not been disclosed but will be detailed in documents filed with the US Securities and Exchange Commission later this year.
The report shows that Mr Bramble's predecessor at Allfirst, Mr Jerry Casey was paid €296,634 for consultancy work at Allfirst. Mr Casey announced his retirement from the Allfirst board of directors in March.
Mr Tom Mulcahy, who retired in July 2001 was group chief executive for most of the five-year period during which the fraud was perpetrated at Allfirst.
He was also on the board of Allfirst but stepped down in March after the AIB board discussed the fraud. His bonus would have been worth up to €190,000 last year. His total payment was €507,000 including a salary of €380,000, fees of €43,000, other benefits worth €16,000 and pension contributions of €59,000. In 2000, Mr Mulcahy's pay package was €1.2 million and included a bonus of €349,000.
AIB head of finance and risk, Mr Gary Kennedy missed out on a bonus of as much as €141,000. His total remuneration was €399,000, including a salary of €282,000, benefits of €37,000 and pension contributions of €42,000. Mr Kennedy was awarded 20,000 share options to be exercised at €13.05.
Another former executive, Mr Kevin Kelly, who retired from the bank in 2001 was paid €218,000. His bonus could have amounted to €72,000 based on a salary of €144,000.
AIB chairman, Mr Lochlann Quinn was the highest paid non-executive director receiving €207,000 from the bank, up 5 per cent on the previous 12 months. AIB deputy chairman, Mr John McGuckian was paid €75,000. Mr Adrian Burke was the next highest earner netting €65,000. Other non-executive directors earned between €4,000 and €38,000.
AIB will hold its annual general meeting for shareholders in Belfast on May 29th at the Culloden Hotel. The meeting will begin at 11 a.m. Shareholders wishing to travel by train from Dublin will have to take the 7.40 a.m. service from Connolly Station. It arrives in Belfast Central Station at 9.45 a.m. AIB has arranged for a bus to meet shareholders at the station and to transport them to the hotel.