Fianna Fáil is prepared to support the payment of a long-term bonus to the new chief executive of AIB if the candidate commits to a minimum five-year contract and helps to secure a substantial return to the State of its €20.8 billion in bailout funds.
Speaking to The Irish Times last night, the party's finance spokesman Michael McGrath said AIB needed to "cast the net far and wide in the search for a top calibre candidate" to replace David Duffy, and offering an incentive package might be necessary to secure the right person.
“I believe the performance element of any remuneration package for the new CEO should be designed to reward long-term performance and this will hopefully result in the CEO staying for at least five years to provide continuity and stability at the bank,” he said.
Bailout
Mr McGrath, a member of the Oireachtas banking inquiry, said any scheme needed to be “designed appropriately” and linked to long-term performance and the repayment of the State’s bailout.
“I don’t subscribe to the view that bonuses are bad in all circumstances,” he said, adding that it could be “good business for the State if AIB’s bailout funds are repaid”.
Mr McGrath said he would not be prescriptive as to how the performance-related payment should be structured, whether in shares, stock options or cash.
Asked if the same incentives should be made available to Bank of Ireland chief executive Richie Boucher and Jeremy Masding at Permanent TSB, Mr McGrath said it should be linked to the "repayment of bailout funds". "In the case of AIB, it's a new contract of employment," he said.
Repaid
Bank of Ireland has repaid its near-€6 billion in bailout funds from the State, while PTSB is planning to pay €400 million this year in a first repayment of its €2.7 billion in rescue funds from taxpayers. AIB has yet to repay any of its bailout money.
Mr McGrath's comment come after the Minister for Finance Michael Noonan told him that a new chief executive of AIB would be appointed "within the coming months".
The chief executives AIB, Bank of Ireland and Permanent TSB are subject to a €500,000 salary cap and bonuses are not permitted. Bank executive bonuses have been a political hot potato since the crash in 2008, which involved the State paying €64 billion to bail out the domestic banks.
