Thomas Molloy: Time we had some balanced debate on bankers' bonuses
Published 29/01/2014 | 02:30
NEWS that executives at Allied Irish Banks are trying to engineer higher salaries just years after the bank helped destroy this country's finances is sure to anger most citizens.
The anger directed towards the executives who did so much to damage Ireland Inc is well justified, but is it not unreasonable to blame the men and odd woman who have been charged with cleaning that mess up?
There has been a clean sweep within the top echelons of most of the banks and most senior executives were appointed after the financial crisis. Some of them have done a good job restoring their banks' fortunes while others have struggled.
To insist none of them should ever receive a bonus because of the sins of their predecessors makes little sense. People in any walks of life who do exceptional things deserve to be singled out and rewarded. It is time for a more nuanced debate about bankers' pay.
A proper debate would acknowledge that some bankers are saving the taxpayer many millions of euro by making the right decisions. The same debate would acknowledge that €500,000 is not a princely salary for somebody who has to run an organisation with many thousands of employees. It is, after all – in relative terms – not that much more than some charity bosses pay themselves.
A proper debate would also acknowledge that far too many people in the financial services industry are still paid too much for performing simple tasks. Nobody should feel entitled to a fat pay cheque just because large amounts of cash pass through their hands, but there are exceptions.
The vital question is how any new bonus system should be structured. A proper bonus system will reward people for making wise, long-term decisions. This means that most bonuses for senior executives should be paid several years after the year in which they were earned.
A bank should also have the ability to take back any bonus if it emerges the bonus should not have been paid in the first place.
It is difficult to get a bonus system right, but not impossible. One of the lessons from the crisis is that badly structured bonuses have the power to bring down banks and countries but that does not mean employees at our banks should be told they do not deserve them. It is time we moved on while learning from the past.