The Irish Times view on bankers’ remuneration: No appetite to raise pay
With the economy flying again, bankers are itching to loosen the shackles on their remuneration
The thorny issue of bankers’ pay resurfaced again last week through comments from the two of the most senior directors at AIB, which is 71 per cent State owned. On Thursday, AIB chairman Richard Pym said pay restrictions imposed by the government post the crash had effectively made AIB a “training ground” for bankers who then move on to better paid jobs with competitors.
This chimed with comments by AIB chief executive Bernard Byrne in an interview with The Irish Times last week. “If you have no . . . defined benefit pension, no variable pay, no shares, it’s very easy to leave. If those things are in place to create a lock-in mechanism then [for executives] it’s harder to leave,” he said.
The bank, which received a €21 billion bailout, is cranking up its rhetoric on pay and bonuses just as the Minister for Finance has appointed consultants Korn Ferry to conduct a review of bankers’ remuneration.
He should know there is little appetite among the public, or most members of the Oireachtas, to reward bankers with higher pay
Executives at banks bailed out by the State are subject to annual salary cap of €500,000 (excluding pension payments), while bonuses are prohibited. With the economy flying again, bankers are itching to loosen the shackles on their remuneration. This is dressed up in the cloak of aligning the interests of executives and shareholders, and the competitive landscape in financial services for skilled leaders.
These concerns carry little weight with taxpayers who were soaked for €64 billion to bail out domestic banks after the crash, and whose trust in bankers has been dented further by the tracker mortgage scandal over the past two years.
Earlier this year, AIB’s board recommended a deferred share scheme for executives, worth up to 100 per cent of their salaries. Jim O’Hara, chair of the bank’s remuneration committee, said it was designed to “somewhat mitigate” the “heightened” risk of losing senior executives at the bank.
With the tracker mortgage scandal raging, the proposal was rightly voted down by Minister for Finance Paschal Donohoe.
The Minister will no doubt face more calls to change the rules around remuneration in the coming weeks. He should know there is little appetite among the public, or most members of the Oireachtas, to reward bankers with higher pay and bonuses, particularly at those banks which still have to fully repay their bailout funds.