EBS bosses won't leave with golden handshakes
Published 01/07/2011 | 05:00
TOP bosses at EBS have agreed not to invoke their controversial entitlement to quit the building society with a golden handshake when it merges with AIB, the Irish Independent has learned.
Details of the golden parachutes -- which allow executives to resign with bumper pay-offs if the building society changes ownership -- first emerged in April when EBS reported 2010 losses of €590m.
At the time, EBS boss Fergus Murphy declined to say how many executives had the so-called 'change of control' clauses in their contracts or how many would use them.
The executives involved are believed to be on six-figure salaries.
The terms of their change of control clauses are unclear but such clauses typically award about two-year salaries, implying substantial six-figure payoffs.
They would have had the same entitlements had the building society been sold to the Cardinal consortium, which was named preferred bidder before the sales process was halted so EBS could be folded into AIB.
Mr Murphy, whose salary is capped at €360,000, also wouldn't say whether he could avail of a golden parachute but said he was "hopefully not planning to go anywhere".
Sources last night confirmed that all of the EBS management team have now confirmed they will stay in place when the AIB merger goes through, so there will be no golden parachute payments.
The final management structure of the merged AIB and EBS has yet to be resolved, but Mr Murphy is expected to be offered a seat on AIB's main board.
Other executives in AIB and EBS may go on temporary secondment to the opposite institutions.
The future of EBS's own board remains unclear, but the Central Bank has been pushing for financial subsidiaries to have boards independent of their parent companies, so this is likely to bode well for the building society's non-executive directors.
Change of control clauses are typical in some employment contracts, though the topic generated significant public outcry when it emerged that Aer Lingus bosses could get up to €2.8m if the airline was taken over by Ryanair.
News of the EBS team's commitment to the new entity comes just days after Finance Minister Michael Noonan formally approved the merger between the two institutions.
The merger is set to formally go through tomorrow -- on the same day that Anglo Irish Bank and Irish Nationwide will be formally unveiled as a new vehicle dubbed IBRC.