MINISTER FOR Finance Brian Lenihan has asked the guaranteed financial institutions to limit top pay at €500,000, despite the Government bank remuneration committee setting a higher cap for top executives at the four main banks.
The Covered Institutions Remuneration Oversight Committee (Ciroc), which was set up to examine bankers’ pay under the terms of the €440 billion guarantee, considered bank salaries, bonuses and pensions “to be, in many cases, markedly excessive”.
The committee recommended that no bonuses be paid and that pension payments be reviewed.
Ciroc concluded that the chief executives at the State’s two main banks, Allied Irish Banks (AIB) and Bank of Ireland, should be paid a maximum of €690,000 a year, and that the chief executives of Anglo Irish Bank and Irish Life & Permanent (IL&P) should have their pay capped at €545,000.
Mr Lenihan wrote to the guaranteed institutions asking them to consider the €500,000 cap for top banks and the tiered pay structure for lower-ranking executives.
He set the cap below Ciroc’s recommended level for four banks, taking into account further economic downturn, the financial positions of the banks and the lower caps set by the United States and Germany on salaries of government-aided financial institutions.
The Minister said the €500,000 limit was “appropriate”.
The Government said it considered Ciroc recommendations on bonuses, pensions, long-term incentive plans and board subcommittees “appropriate but that remuneration terms should be lower than those recommended”.
Ciroc recommended a tiered pay structure below the level of chief executive, with other executives’ pay “adjusted to take account of the revised salaries for chief executive” and for there to be “adequate headroom” between these staff and chief executives.
AIB chief executive Eugene Sheehy has said he would be paid a salary of €690,000 a year for each of his remaining years at the bank.
A spokeswoman for AIB said the board of the bank would meet “as soon as possible” to consider the Minister’s request.
Bank of Ireland has not yet agreed a salary for its new chief executive Richie Boucher. A bank spokesman said it would consider the Ciroc report and pay cap.
Mr Boucher’s predecessor Brian Goggin, who is leaving the bank this month, said he would be paid “less than €2 million” in the financial year to March 2009.
Ciroc said that, under its recommendations, the salary cuts for chief executives of the six Irish-owned guaranteed institutions (excluding Postbank) would range from 27 per cent to 64 per cent.
The committee said that “exceptional situations” may arise where individuals with “scarce and specialist skills” would be paid more, but any departure from the recommended approach would have to be justified, case by case.
Ciroc recommended that no bonuses be paid for the duration of the two-year bank guarantee, but said it may be “appropriate” to introduce new bonus arrangements in future to take account of “long-term incentive initiatives”.
New bonus schemes should be discretionary, not contractual, Ciroc said.
Bank pay: current levels
Minister for Finance Brian Lenihan has recommended that the annual salaries of bank executives be capped at €500,000 or the amount recommended by the Government-appointed Covered Institution Remuneration Oversight Committee (Ciroc), whichever is lower.
Ciroc recommended in its report that the chief executives of the guaranteed institutions be paid the following approximate annual salaries:
AIB:€690,000
Bank of Ireland:€690,000
Anglo Irish Bank:€545,000
Irish Life & Permanent:€545,000
EBS:€360,000
Irish Nationwide:€360,000
Postbank:€230,000
Current chief executive salaries :
AIB:€696,300
Bank of Ireland:€1.185m
Anglo Irish Bank:Vacant
Irish Life & Permanent:€890,000
EBS:€441,000
Irish Nationwide:€1 million
Postbank:€260,000
