AIB defends its executive directors' €4m pay package

AIB has strongly defended increases of around 20 per cent in the basic salaries of its four executive directors last year, claiming they were "in line with market rates", the bank said yesterday.

AIB's annual report, posted out to shareholders this week, shows that the total pay packets of the bank's four top executives swelled by an average of 29 per cent in 2004.

These packages, which include basic salary, bonus, profit share, pension and other benefits, cost AIB a total of €4 million last year, up from €3.4 million in 2003.

The largest remuneration went to the bank's chief executive, Michael Buckley, who is due to retire later this year.

Mr Buckley received a total pay packet of €1.445 million in 2004, compared to €1.399 million in the previous year. This included a basic salary of €775,000 and a pension contribution of €210,000, as well as a bonus of €360,000.

AIB's executive directors can, in theory, earn bonuses of up to 100 per cent of their salary.

The biggest beneficiary of this scheme in 2004 was Colm Doherty, head of the bank's capital markets division.

The division's strong performance over the year meant Mr Doherty earned a bonus of €340,000, 81 per cent of his basic salary of €418,000. His total pay amounted to €958,000.

Aidan McKeon, head of AIB's UK operations, was also rewarded for a good year. His basic salary rose by 31 per cent to €356,000, while this was topped up by a bonus of €242,000.

A spokesman for AIB said the level of bonus payments reflected the extent to which its divisions contributed to group profits.

Remuneration matters are decided by the bank's remuneration committee, which includes AIB chairman, Dermot Gleeson, and the bank's senior non-executive director, John McGuckian. In the case of Mr Doherty and Mr McKeon, bonus payments helped to increase the value of their packages by 50 per cent on 2003.

AIB's finance director, Gary Kennedy, was paid an overall package of €844,000 last year, up from €785,000 in 2003. The 2004 payment included a bonus of €235,000 and a pension contribution of €108,000. AIB's 12 non-executive directors shared pay of €986,000 in 2003. Eleven non-executives shared €927,000 in the previous year.

The best-paid non-executive in 2004 was the bank's chairman, Mr Gleeson. He received €285,000, up from €217,000 in the previous year.

AIB's annual report reflects a strong financial year for the bank, during which profits surged by 40 per cent to a record €1.4 billion. It also covers a troubled period however, with 2004 marked by a range of scandals.

The most prominent of these came after it emerged the bank overcharged foreign exchange customers for nearly a decade.

The issue refused to go away, resurfacing recently when senior executive Séamus Sheerin went to court to prevent AIB from firing him over the scandal.