Bank chief caves in on his €1.5m pension deal
Published 22/04/2010 | 06:19
BANK of Ireland chief Richie Boucher last night caved in to intense pressure and effectively handed back his controversial €1.5m pension deal.
He did so after warnings from unions and politicians that his generous package was threatening to scupper the fragile Croke Park pay deal.
Mr Boucher (51) waived his right to retire at 55 and that means the bank now has to set aside far less for his pension at this stage. Last year, the bank's board struck a deal with Mr Boucher which gave him the option to retire at 55 on a pension of 59pc of his salary. This compares to the normal deal of chief executives who step down at 60 on 66pc of their final salary.
In a statement last night Mr Boucher acknowledged the level of comment and debate his pension arrangements had generated. The news will be seen as a victory for unions and those attempting to get the Croke Park pay deal over the line.
It also removes a huge distraction for Bank of Ireland as it lines up a €3.3bn capital-raising deal which will be announced on Monday.
Last night's decision by Mr Boucher followed a day of severe criticism of his package.
Taoiseach Brian Cowen last night "welcomed the fact Mr Boucher responded to the public concern as was reflected by the Taoiseach earlier today," his spokesman said.
It is understood there was behind-the-scenes contact between the Department of Finance and Bank of Ireland over recent days.
But Fine Gael leader Enda Kenny, while welcoming the move, said the issue should never have arisen in the first place. "It's no thanks to Brian Cowen that the decision has been changed," he said.
It is understood the bank and Department of Finance were keen at the time that Mr Boucher's initial contract should only be for five years, with an option to review. As such, the bank was obliged to make sure his pension was funded for the possibility of retiring in four years' time.
Sources said the bank wanted to avoid the possibility of an unfettered, long-term boss, such as at disgraced lender Irish Nationwide, where Michael Fingleton was at the helm for 37 years, and Anglo Irish Bank, where Sean FitzPatrick was in charge for 22 years.
However, others suggested it amounted to a sweetheart deal designed to bolster his overall remuneration package as his basic salary was capped by the Government.
Union leaders earlier warned Mr Boucher's €1.5m payment threatened to jeopardise the fragile Croke Park pay deal.
Leading industrial relations figures warned anger generated by the bank boss's payment could result in the pay deal being voted down.
SIPTU general president and Irish Congress of Trade Unions president Jack O'Connor said the payment to Mr Boucher "stinks to high heaven" and could put public servants off backing the agreement.
"This is just more of the same and I do not believe the Government is powerless in this matter, as they would have us believe. This is an issue of political will," he said.
The chairman of the talks that resulted in the Croke Park deal, Kieran Mulvey, said it made it harder to get the deal accepted by public servants after their own wages were slashed.
Mr Mulvey added that payments to top executives in banks were taking place against a background where people were being asked to take severe cuts in wages, pensions and employment.