AIB senior executive are in line to receive deferred shares annually as part of an incentive plan that will commence in 2019.
But executives will not be able to cash in their shares until the State has received its €20.8 billion in bailout funds in full. There are also certain clawbacks built into the scheme in the event of failure.
AIB said the plan would contribute to the retention of key executives by providing them with a “degree of visibility over awards and future payouts”.
The bank’s executive directors and other key leaders will receive deferred shares equivalent to 100 per cent of their salaries, with no cash element.
The awards will be deferred into shares over a five-year period – seven for UK executives.
There will be no up-front payment with vesting of 33 per cent a year occurring on a pro-rata basis between years three and five.
Awards will be made annually based on the prior-year performance, starting in 2019, with reference to the bank’s trading performance this year.
The bank said the plan would be put to a “non-binding advisory” vote of shareholders at its annual general meeting in April.
Annual report,
Details of the deferred share scheme are included in the company’s annual report, published on Thursday. It is described as the bank’s “first step in its journey to more normalised remuneration practices”.
The awards will be made with reference to published financial targets, with a particular focus on reducing non-performing loan exposures, increasing cost efficiencies and maximising shareholder returns.
The share scheme will apply to all executive directors, members of the wider leadership team, and some other senior staff who are “considered critical to the delivery of the group’s strategic objectives”.
As AIB is majority State owned, its executive directors are subject to a €500,000 salary cap and are not paid any cash bonuses, which in any event would be subject to a punitive tax under Government rules.
AIB's annual report shows that its chief executive, Bernard Byrne, received a salary of €500,000 in 2017 and a pension payment of €100,000.
Chief financial officer Mark Bourke received a salary of €470,000, up €3,000 on the previous year, and a pension payment of €94,000.
Its chairman, Richard Pym, was paid a flat fee of €365,000, the same as in 2016. AIB paid its non-executive directors €1.27 million last year compared with €1.13 million in 2016.
In addition, former DAA chief executive Declan Collier was paid a fee of €49,000 for his work as a director with AIB’s UK unit last year, while Anne Maher received €45,000 for the same reason.
IPO
AIB returned to the main stock markets in Dublin and London last year with an initial public offering (IPO) of 29 per cent of its stock, raising €3.4 billion for the State. The Government continues to hold a 71 per cent stake.
Speaking to the media yesterday, Mr Byrne said it was a matter for the Government as to when it might sell more AIB shares into the market, adding that such a move would be part of the ongoing normalisation of the bank.
To date, AIB has repaid €10.5 billion of its bailout funds, he said.
Mr Byrne said any additional share sale this year would be a “short” and “modest process”. Its IPO was one of the biggest in the world last year.
He said investor interest in the Irish economy remains “strong” but noted that there had been a “bit more volatility in equity markets” this year.
“These are issues for the Minister [for Finance Paschal Donohoe] to consider. Ultimately, it is up to the Government to determine [when any additional shares will be sold].”
