State-owned bank barred from paying CEOs bonuses and over half-a-million euros in annual salary
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By Aimee Donnellan
LONDON (Reuters Breakingviews) - Situations vacant: The chance to run Ireland’s second-biggest bank, earn 500,000 euros (C$750,000) a year, and live in a city where large houses in the poshest part of town only cost about two million euros (C$3 million). Sounds enticing, doesn’t it?
Not judging by the recent departures of Allied Irish Banks (AIB) chief executive Bernard Byrne and finance director Mark Bourke. Both have quit for greater lucre elsewhere. Ever since AIB’s 2009 state bailout, the 71 per cent state-owned bank has been barred from paying CEOs bonuses and over half-a-million euros in annual salary. With critics claiming this now undermines the country’s ability to attract global talent, the Irish government is reviewing the ban.
It’s probably true that Ireland’s stance disqualifies existing global CEOs. But it’s less clear why ambitious retail bankers at the likes of Citi, HSBC or BNP Paribas should automatically discount the job. One reason is the base salary will be closer to their current level, rather than the one million-odd euros that existing CEOs command.
Another is the challenge of spending a few years running their own ship, bringing AIB’s share price sustainably above its IPO price, and proving they are ready for a grander CEO gig. The chance to do so while wearing a bonus hair shirt could do wonders for their personal brands.
Potential candidates would still need convincing to waive their bonuses. But 500,000 euros buys a lot of property in Dublin, despite recent inflation. Some of the swankiest Georgian properties dotted along the Irish capital’s coastline fetch around two million euros, according to property website Daft.
Ireland seems unlikely to flip the script on banker pay any time soon. Taxpayers stumped up 64 billion euros, 40 per cent of economic output, to rescue the country’s lenders. The mid-teens percentage of AIB’s 200 most senior managers who have quit is only a modest uptick in the bank’s normal attrition rate. And Taoiseach Leo Varadkar is unlikely to successfully push through banker pay rises lest his minority government collapse.
Ex-Deutsche Bank boss John Cryan once said a fat bonus was not his primary motivation. Anyone who feels similarly should lob an application towards Dublin.
