AGM: AIB chairman Dermot Gleeson welcomed the bank's shareholders to the "people's Republic of Cork" and assured them their bank will continue to make healthy profits.

At its annual general meeting yesterday, Mr Gleeson described the bank's prospects for profitability as "bright" and spent much of the more than two hours defending the large payments made to past and present executives.

"We pay well," he stated. "We must be cognisant of the fact that people can be attracted elsewhere," said the chairman, who was paid €375,000 last year.

He was not mostly defending his own pay package, but rather the very generous severance payment given to former AIB executive Gary Kennedy.

One shareholder said that Mr Kennedy, who got payments totalling more than €3.6 million from the bank, got a platinum rather than a gold handshake.

Mr Kennedy, who left the bank last December, earned a €470,000 salary last year, a €265,000 bonus and pension contributions of €2.1 million.

The bank also paid €150,000 in legal fees as part of his severance and shareholders were yesterday asked to approve a further €579,000 payment, in compensation for loss of office.

Mr Gleeson said the bank's payment to Mr Kennedy reflected the board's "real appreciation" of his work and the "legal entitlements" of his job. These entitlements, he said, arose as a result of a board-approved restructuring that split Mr Kennedy's role into two separate jobs.

The chairman said Mr Kennedy had been contracted to do a bigger and different job within the bank but had decided to leave and negotiations with his lawyers ensued.

The board viewed the agreement as "a necessary investment" to secure a very important restructuring. "The signs so far are that the new structure is working well and I believe this will pay dividends in the years ahead" he told shareholders. One of them inquired whether Mr Kennedy's departure could be described as amicable? The chairman said he believed so.

Other shareholders wanted to talk about other former bank executives, notably those who had to make tax settlements with the Revenue as a result of an offshore investment.

One asked whether the bank could stop their pension payments, but was told it was not entitled to legally do so.

Mr Gleeson handled a broad range of questions. He firmly stated that the bank would not be making a bid for Eircom and that it was making plans to cope with global warming. Earlier this year, he said it had relocated some of its data centres that may be at risk from flooding, he said.

Shareholders were told that AIB was one of Ireland's most successful companies. "It's 40 years since the Royal, Provincial, and Munster and Leinster joined together to form AIB.

"We have had good years and bad but have come a long way and learned a lot," he said.