![Minister for Finance Michael Noonan: “If [Bank of Ireland] appoint somebody significant from outside, I think the parameters for negotiating pay will be somewhere in line with Mr Boucher’s case.” Photograph: Bryan O’Brien](https://www.irishtimes.com/resizer/v2/IVAQO5GZRGR4NTTSBN2OQ6BAYM.jpg?auth=24340758d102bf7fbf01031fd45895a9ad3d793401a5ff3d21b9398433fb2bcd&smart=true&width=1024&height=576)
Bank of Ireland has effectively been given the nod by the Minister for Finance to breach a €500,000 State-imposed pay cap to secure a new chief executive. However, Michael Noonan ruled out introducing share incentives for top managers at rival AIB, as the lender prepares to return to the main Dublin and London stock markets.
The remuneration of Bank of Ireland's outgoing chief executive Richie Boucher exceeds the limits and, according to Mr Noonan, "if they appoint somebody significant from outside, I think the parameters for negotiating pay will be somewhere in line with Mr Boucher's case".
While chief executives of bailed-out banks have had their pay capped at €500,000, Mr Boucher’s has been above that level since his 2009 appointment. His salary was €690,000 last year, but total compensation, including pension contributions and a car allowance, reached €958,000 in 2016.
Odds from bookmaker Paddy Power suggest that Bank of Ireland’s head of retail banking Liam McLoughlin and chief financial officer Andrew Keating are favourite to succeed Mr Boucher.
Concession
However, Mr Noonan’s concession on pay may widen the field of potential outside candidates. Insurer FBD’s chief executive Fiona Muldoon and Bank of Cyprus’s head, Irishman John Hourican, are also among the names attracting short odds at the bookmaker.
The Government retains a 14 per cent stake in the bank. A spokesman for the State’s largest lender by assets declined to comment.
Bank of Ireland highlighted in a prospectus published last week – relating to its plans to set up a new holding company – that pay restrictions “may impose stress” on the lender’s ability to retain key staff, particularly as Ireland may see a “material inflow” of overseas banks as a result of Brexit.
Though the Minister was open to discussion on pay at Bank of Ireland, he said he had no plan to allow AIB to set up a long-term share incentive plan for its top executives, even though some potential investors in the State’s planned sale of a 25 per cent stake in the bank reportedly expect to see such a rewards system in place to align shareholders’ interests with management.
“Nobody has brought it up with me as an issue yet,” Mr Noonan said.
Sources have said that the State will most likely sell an initial 25 per cent of AIB stake in the market in May or June, the earlier of two windows in 2017 previously outlined by the Minister. However, Mr Noonan said it was not inevitable yet that the 99.8 per cent State-owned bank will return to the main stock markets in the first half of the year.
“All the preliminary steps are being crossed successfully, but it’ll be about mid-May before we reach the point of no return,” he said.
Taxpayers injected a total of €21.8 billion into AIB between 2009 and 2011. The bank has so far repaid about €3.3 billion by redeeming preference shares and contingent capital notes issued to the Government during the crisis. AIB has continued to have a listing on the junior stock market in Dublin while under State control.
