THE FORMER managing director of Allied Irish Banks, Colm Doherty, received a pay package of more than €3 million last year after stepping down in November as a condition of the State’s second bailout of the bank.
Mr Doherty received a salary of €432,000 for the period from the start of the year to early November. Under his contract, he was entitled to a termination payment of €707,000 in lieu of a year’s notice after the board of AIB was told to terminate his contract at the direction of the then minister for finance Brian Lenihan.
Mr Doherty received a further cash payment of about €2 million in lieu of a contribution to his pension. This was made under an existing agreement which entitled him to a taxable cash payment after the government capped the pensions of company executives at €5 million in 2006.
He received the payments under a contract agreed when he was promoted in November 2009 to the role of managing director, replacing chief executive Eugene Sheehy.
The Department of Finance signed off on his pay, under which Mr Doherty took a salary cut from €633,000 to €500,000 a year, the Government cap for top bankers.
Details of payments to Mr Doherty must appear in AIB’s 2010 annual report, which is expected to be published shortly, possibly this week. The bank reported a pretax loss of €12 billion for the year last week.
A spokesman for AIB said it had no comment in advance of the publication of the report. A Department of Finance spokesman said severance payments to Mr Doherty were in line with what he was entitled to receive under his contract. Mr Doherty could not be reached for comment.
AIB has since then been virtually nationalised and the bank’s capital bill has risen €20.5 billion to protect against mounting losses.
Mr Doherty’s appointment as managing director was criticised in late 2009 as he was an internal candidate. His appointment coincided with the appointment of fellow board member Dan O’Connor as executive chairman. Both were forced to resign as a condition of AIB’s recapitalisation by the State after the Central Bank directed AIB to raise a further €3 billion last September. AIB is still searching for a chief executive to replace Mr Doherty.
Executive chairman David Hodgkinson, who joined the bank last October, is paid an annual fee of €500,000 and about €120,000 in accommodation and related expenses, as well as compensation for any tax arising from this benefit.
Dr Michael Somers, the former chief executive of the National Treasury Management Agency, receives €150,000 a year as deputy chairman of the bank.
