It is time for ‘mature debate’ about pay of bank executives

Permanent TSB chief executive Jeremy Masding believes the time is right for a "mature debate" in Ireland about pay for senior bank executives.

At present, a cap of €500,000 applies to the salaries of executives at the Irish banks that have the State as a shareholder, while no bonuses are allowed. The only exception is Richie Boucher at Bank of Ireland, who earns more than the salary cap and was in place before the limits were introduced.

Speaking in advance of the Christmas break, Mr Masding, who receives a salary of €400,000 annually, said there should be three elements to executive pay – a benchmarked salary, a “controlled” bonus, and a long-term incentive plan.

“Our salary should be benchmarked against other jobs in Europe, and we should be paid within a range of a median,” he said. “So if the market median is 100, the range is 80 to 120 based on experience. If you perform you move up. When you get to 120 you’re red circled.

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“There shouldn’t be bonuses for control functions [but] there should be bonuses for those whose output is easily measured, subject to real controls.

“For senior executives, there should be a bonus scheme but it should be for a very small proportion of your salary, 10 or 15 per cent, something like that. The third bit is the long-term incentive, which might be a five-year vesting period. An incentive scheme that is tied to the business. That’s perfectly rational. In my opinion, that debate should start to be had.”

Offers to leave

Mr Masding joined PTSB in early 2012 and said he had turned down offers to leave the lender to see through the job of rebuilding the bank, and for family reasons.

When might he consider leaving?

“Probably a minimum 18 months. If I left now I’d feel I hadn’t done the commercial bit and that’s what my career has been built on, commercial performance.

“I don’t have any financial capital to tie me here. Sadly, once my son has finished his Leaving Certificate [in the summer of 2017], if someone made me a [David] Duffy-like offer I’d probably take it more seriously than today.”

Mr Duffy left AIB in 2015 to join Clydesdale bank in the UK, where he receives much higher remuneration as chief executive.