€3m payment to AIB chief sparks call for new review
Minister for Finance Michael Noonan today called for bankers’ remuneration to be re-examined after it emerged that payments in excess of €3m were made to former Allied Irish Banks managing director Colm Doherty when he stepped down from his role in November - a condition of the second bailout of the beleaguered bank by taxpayers.
The payments were made to Mr Doherty, who succeeded chief executive Eugene Sheehy, under a contract agreed on his promotion in November 2009.
AIB said today that it would not be commenting on executive salaries in advance of the publication of the group’s annual report.
Mr Doherty received a salary of €432,000 for 2010 up to November and under his contract he was entitled to a termination payment of €707,000 in lieu of a year’s notice when the board of AIB was directed to terminate his contract by former Minister for Finance Brian Lenihan, according to a report in today’s Irish Times. He was also paid about €2m instead of a contribution to his pension.
Mr Doherty took a salary cut from €633,000 to €500,000 on his promotion in November 2009 in line with the Government cap on pay for top bankers.
The bank last week reported a pre tax loss of €12bn for 2010 and is expected to publish its annual report within the next week.
Mr Doherty joined the board of AIB in 2003 and was a director in the period when the bank made bad lending decisions. He was not available for comment today but a Department of Finance spokesman said that the payments to him were in line with his contract.
Minister for Finance Michael Noonan said today that the whole approach to bankers’ remuneration had to be re-examined and that the Nyberg report into the causes of the economic collapse would be discussed at today’s cabinet meeting.
The report by Peter Nyberg, a former International Monetary Fund economist on the Irish banking crisis is awaiting a cabinet decision on publication.
The Minister for Agriculture Simon Coveney today described the payment to Mr Doherty as ‘inappropriate’ and the general secretary of the Irish Bank Officials Association Larry Broderick said that the culture at the top of the bank had not changed despite the serious crisis the sector had undergone.
"We will not be cooperating with the restructuring of the industry until such time as these issues are addressed," Mr Broderick said.
Mr Doherty’s appointment to the top job at AIB was controversial at the time as it was at odds with the former Fianna Fail/Green government’s policy of change at senior level in the banks.
Mr Doherty was an internal candidate and his appointment coincided with the appointment of Dan O’Connor, a fellow board member, as executive chairman.
AIB is still seeking a chief executive to replace Mr Doherty while the bank’s new chairman David Hodgkinson is paid an annual fee of €500,000 as well as €120,000 in accommodation and related expenses.
The bank’s deputy chairman, Dr Michael Somers, former head of the National Treasury Management Agency, receives a fee of €150,000 per year.