Bank of Ireland governor Mr Lawrence Crowley has defended the generous remuneration terms offered to the firm's chief executive, Mr Michael Soden, who has been with the organisation for seven months.

One shareholder thought the court had "gone mad" by agreeing to pay Mr Soden a package of €1.61 million, considering his brief period of employment with the bank.

The governor said the bank was very pleased to have employed someone of the calibre and experience of Mr Soden. He said some €986,000 of the package paid to him already was a one-off payment to compensate him for the lucrative financial rewards he would forego at National Australia Bank to join Bank of Ireland.

"He was prepared to sacrifice very considerable future rewards and €986,000 was arrived at as a sum to part-compensate him for that loss," said the governor. Shareholders also approved higher remuneration for the bank's directors at the annual general meeting.

The total payment to non-executive directors, excluding the governor and deputy governor, Ms Mary Redmond, was set at €500,000. This has been upped to €800,000, raising the average fees paid to the directors to €60,000 from €45,000, some of which will be paid in future share options.

Mr Crowley stressed the bank was far ahead of modern standards on corporate governance and if any directors were found to have been involved in wrongdoing, they would be removed from the court. The names of some directors were mentioned by shareholders as having been associated with recent inquiries and controversies.

Mr Denis O'Brien has been questioned by the Moriarty Tribunal about the awarding of the second mobile phone licence to Esat, the firm he founded.

Another director, Mr Tony Barry, was mentioned in the Ansbacher report as a client of Ansbacher Bank.

Details of this relationship had been previously disclosed by Mr Barry and related to income, which had been declared for tax, used to establish an offshore trust for two of his children who lived abroad.

Mr Donal Geaney, who stepped down as chairman and chief executive of the troubled pharmaceutical company Elan on Tuesday, is also a director of Bank of Ireland.

Mr Crowley, who is also a director of Elan and a member of the committee of five executives that will now run the company, said Mr Geaney had sent his apologies to shareholders. "I am sure we all understand why he can't be here," he said.

The governor said Mr Geaney's departure from Elan had just arisen and the court had not had an opportunity to consider the impact of this departure, if any, for his continuing to serve as bank director.