THE GOVERNMENT has insisted it will not waive the €500,000 salary limit for top bankers in the proposed promotion of Allied Irish Banks (AIB) executive Colm Doherty to managing director of the bank.
Minister for Finance Brian Lenihan said that following a Cabinet meeting the Government was refusing a request from AIB to exceed the pay limit set by him last March in the case of Mr Doherty.
The bank plans to appoint chairman Dan O’Connor as executive chairman encompassing the two roles of chairman and chief executive to run the bank alongside Mr Doherty in the lower-ranking role of managing director.
Responding to a report in yesterday’s
Irish Times
that Mr Doherty was to be appointed managing director of AIB with an expected salary of about €633,000, the same level he was paid in 2008, Mr Lenihan said the Government was not willing to breach the pay cap in this instance.
“I can tell you that the Government are not willing to break with the established guideline in this case,” the Minister told RTÉ’s
News At One
radio programme.
Mr Lenihan said his department had received a request from AIB at 7pm on Monday to exceed the €500,000 pay cap in a particular case and that this was mentioned to him at 8.30pm.
He said there were a number of discussions to be had with AIB.
Talks on the appointment continued within AIB late yesterday after the Government’s decision. A spokeswoman for the bank said she could not make any comment until the process was completed.
A Department of Finance spokesman would not comment beyond the Minister’s statements.
It is believed the salary to be paid to Mr Doherty was only raised late in the long-running engagements between AIB and the Government over management changes.
Mr Lenihan told RTÉ that he had expressed a preference for an external appointment as chief executive of AIB to replace Eugene Sheehy who will step down once a replacement is found.
However, the Minister said that following contacts with former Labour leader Dick Spring, a Governmentappointed director of AIB, he was satisfied it was not possible to make an external appointment. Mr Lenihan acknowledged that the €500,000 salary cap had been an obstacle for external candidates.
A compromise deal has been proposed whereby Mr O’Connor and Mr Doherty would be appointed to the new roles and two outsiders would be installed as chief risk officer and chief financial officer. It has also been proposed that Dr Michael Somers, retiring as chief executive of the National Treasury Management Agency, will take over the role of deputy chairman of AIB to represent the State’s interest.
Mr Lenihan said Richie Boucher, an internal candidate at Bank of Ireland, “still remained somewhat above the guideline” after taking a pay cut of about a third when he became bank chief executive.