SENIOR AIB executive Colm Doherty, who will shortly be appointed managing director of the bank, will not be forced to take a salary cut to meet the Government’s cap of €500,000 for top bankers.
Mr Doherty’s annual salary is expected to remain at about €633,000, the amount he was paid in 2008, after his imminent promotion to the new role of managing director at AIB, according to sources with knowledge of the bank’s plans.
Minister for Finance Brian Lenihan set a cap of €500,000 on the salaries of chief executives under the bank guarantee last February, lower than a base salary of €690,000 recommended by a Government-appointed committee for the State’s two biggest banks.
Mr Doherty, AIB’s preferred choice as chief executive, is set to be appointed to the new post of managing director in a compromise reached with the Government, which had favoured the appointment of an external candidate as chief executive.
As part of the deal, the bank’s chairman Dan O’Connor will assume management responsibilities as executive chairman, working alongside Mr Doherty.
Both Mr Doherty and Mr O’Connor will remain on their existing salary and pay levels as the role of chief executive will remain vacant. They will both assume heavier workloads and more wide-ranging responsibilities at the bank, sources said. Aspects of the deal have yet to be finalised.
A spokesman for the Department of Finance had no comment.
Mr O’Connor, who became chairman during the summer, is expected to be paid €390,000, the reduced annual fee paid to his predecessor, Dermot Gleeson. This would be in excess of the €276,000 recommended by the committee on executive pay appointed by the Government under the bank guarantee.
As part of the reshuffle at senior management level, AIB will also signal that it plans to appoint two external candidates to senior executive roles – chief financial officer and chief risk officer.
In a further compromise reached with Government, the bank will agree to appoint Michael Somers, who is retiring as chief executive of the State’s debt manager, the National Treasury Management Agency, to the post of deputy chairman. The appointment is being made at the insistence of the Government in an attempt to foster public confidence in the bank.
The management changes have the blessing of the Government, which holds a 25 per cent stake in the bank following the State’s €3.5 billion capital investment last May.
AIB’s board had wanted the Government to accept the appointment of Mr Doherty, who ran the bank’s profitable capital markets division, as chief executive. However, following the controversy surrounding Bank of Ireland’s appointment of an insider, Richie Boucher, as its chief executive last January, the Government encouraged the bank to seek an external appointee instead.
After a trawl of both internal and external candidates, the board of the bank felt that Mr Doherty was the best candidate for the job. The proposed salary of €500,000 for the role of chief executive was reported to have been a reason why some outside candidates turned the job down.
AIB board thumbs its nose at Lenihan on choice of boss: page 19