THE CHIEF executive of Irish Nationwide Building Society, Michael Fingleton, was paid a bonus of €1 million just weeks after the Government introduced the €440 billion guarantee to protect the entire banking system.
However, it emerged last night that the Department of Finance intends to put pressure on Mr Fingleton to repay the bonus.
Mr Fingleton’s “pre-contracted incentive bonus” for 2008 was revealed in the report of the Government committee set up to assess executive pay in the seven banks and building societies covered by the guarantee, which was introduced on September 30th.
The report from the Covered Institutions Remuneration Oversight Committee (Ciroc) showed that Mr Fingleton was paid the bonus in November. The building society agreed to the bonus early last year and it was paid before the two Government-nominated directors were appointed in December.
The Ciroc report showed that Mr Fingleton’s annual salary increased at a time when the banking sector came under severe stress and the Government moved to protect the financial system with the guarantee.
Mr Fingleton’s overall pay package for 2008 totalled €2.34 million, which included benefits and fees of €453,240. This was higher than his 2007 pay of €2.31 million and made him the best-paid chief executive in Irish banking for 2008.
Minister for Finance Brian Lenihan wrote to the seven guaranteed institutions yesterday, seeking a pay cap of €500,000 for bank executives. This is despite Ciroc’s recommendation that the salaries of the chief executives of the four main banks be capped at a higher level.
“We all have to set an example in these very difficult times for our country and it has to start at the top,” Mr Lenihan said.
Ciroc recommended that the salaries paid to the chief executives of Allied Irish Banks and Bank of Ireland be capped at €690,000 and the chief executives at Anglo Irish Bank and Irish Life Permanent be paid no more than €545,000 a year.
The committee found that bank pay was “excessive”, and recommended no bonuses be paid and that pension contributions be reviewed.
Ciroc recommended that the chief executives of EBS building society and Irish Nationwide be paid an annual salary of €360,000.
The Government has said it will consider legislation to enforce pay caps, if necessary.
Fine Gael, which has called for bank pay to be limited at €250,000, accused the Government of “bottling it”. Party finance spokesman Richard Bruton said he was “astonished” at the €500,000 limit.
The Ciroc report shows that Mr Fingleton was the only chief executive in receipt of a higher salary this year. His salary rose 12 per cent this year, to €1 million from €893,000.
Department of Finance sources said Mr Lenihan was “not impressed” with the bonus payment paid to Mr Fingleton in November 2008 after the bank guarantee was introduced and that the matter “would be pursued”.
Mr Fingleton declined to comment and directed queries to his spokesman: “I cannot talk to you. There is a procedure; talk to [spokesman] James Morrissey.”
The Irish Nationwide spokesman said last night he had received no response from the building society to a list of questions e-mailed to the mutual society by The Irish Times.
Irish Nationwide is thought to be preparing to announce a sharp increase in provisions against losses on its €12 billion loan book in its annual results for 2008. Eighty per cent of its loans is exposed to the collapsing Irish and British commercial property and development sectors.
The society is estimated to have the heaviest exposure to property development of any Irish lender as a proportion of overall loans.
In a separate development, the Director of Corporate Enforcement told the High Court that outdated company law was hampering his investigation into Anglo Irish Bank.
The director applied to the court to approve of a scheme aimed at addressing issues of legal privilege relating to a massive amount of electronic information at the bank.
