The Australian chief executive office of IBRC has gone on the offensive today to defend salaries at his bank after it emerged that 30 staff are earning basic salaries in excess of €200,000 per annum and after it was first revealed in a parliamentary question that IBRC had told Minister for Finance, Michael Noonan to get lost in April 2012 when Minister Noonan sought a 15% waiver in €200,000-plus salaries. Remember this was four months after Minister Noonan made a similar request to the NTMA and NAMA where there was subsequently 100% compliance with the request.
But stand back for a moment and you will see that employees in the banking sector have been making sacrifices and sometimes without being asked. There are others who have either not been asked to waive some part of extraordinarily large salaries or if they have been asked, they’ve said “no”. And the split is on national lines, with Irish executives waiving salaries and British and Commonwealth executives saying “no”. Here’s an overview.
First up, we have the anomalous position at the Central Bank of Ireland where the Governor, Professor Patrick Honohan is earning 40% less than one of his deputies. The last Central Bank of Ireland annual report revealed that Governor Honohan was paid €276,324 compared with the salary paid to his deputy Matthew Elderfield of €340,000. Not only that, but in 2012 Governor Honohan is gifting a further €63,000 resulting in his annual salary for 2012 being €213,000, nearly 40% less than his deputy. In October 2012 in response to a parliamentary question, Minister Noonan said he had no control over Central Bank salaries and said he had not sought waivers of salary at that bank.
Next up, we have the CEO of AIB, David Duffy, the Dubliner with the mid-Atlantic accent who revealed at an Oireachtas committee hearing last week that he was employed on the salary cap of €500,000 but that he had himself subsequently gifted a further 15% back to the Exchequer meaning he now earns €425,000. Contrast that with Zambian-born CEO of Bank of Ireland Richie Boucher whose basic salary is €640,000 and who apparently either hasn’t been asked to take a paycut or if he has, the accounts would suggest he’s said “no”
Next is IBRC, the name of the organization which merged Anglo Irish Bank with Irish Nationwide Building Society. Australian Mike Aynsley had a package last year worth €866,000 and will this year be paid €500,000 plus allowances of €38,000 and a 25% pension. Compare IBRC with NAMA and on practically every level, NAMA has a bigger and tougher job than IBRC and is doing that job at a cost of 33% less than IBRC. Yes, IBRC may have to deal with the Quinn family but NAMA has to deal with Paddy McKillen, Johnny Ronan and Treasury. It should be made clear that there haven’t been allegations of malfeasance against Messrs McKillen and Ronan but both have proved to be difficult and litigious individuals, and the Treasury story is far from finished – and Paddy McKillen has launched another appeal against a decision in Britain involving NAMA. And yet Brendan McDonagh is paid €430,000 and has waived 15% of his salary so that in 2012 he will earn €365,500. And it was recently revealed that pension costs at NAMA are an average of 5% of salary.
And at IBRC we know from the Sinn Fein finance spokesperson’s parliamentary questions this week that IBRC has rejected Minister Noonan’s attempt to secure paycuts at the top level of that bank. We don’t yet know what salary attaches to IBRC’s British Chief Financial Officer Jim Bradley but the betting is that he is one of the five IBRC staff on €400,000-499,999 as revealed by Minister Noonan. Ditto for IBRC’s “special projects” specialist who pursues the Quinns, Briton Richard Woodhouse. However there has been one pay cut at IBRC and that has been to the chairman’s salary. Chairman Alan Dukes has taken a paycut of €100,000 to his €250,000 annual fees and he may have offered a subsequent waiver in June 2012.
Back over at NAMA’s parent organization, its CEO John C Corrigan has taken a 15% cut to his €480,000 salary. The days of the CEO of the NTMA being paid €1m are long gone and John will get paid a gross salary of €408,000 in 2012.
Many people will probably look at the reduced salaries of the Irish working in the banking sector and say that they are still too high. But there has been sacrifice there which has not been mirrored by non-Irish banking personnel. And they might say, why should they offer pay-cuts, they’re not Irish and not expected to put on the “Green Jersey” but if the evidence is that Irish peers will accept paycuts in a sector which is largely controlled by Minister Noonan, then maybe we should be seeking personnel changes.
I think there is a practical reason for the different responses tp pay reductions – the “Irish” executives expect to stay and be rewarded in the long term with plum appointments, while the “non-Irish” expect to move on to another country for the next job.
The split you’re highlighting here is really a public-sector/private-sector split. The “Irish” executives mentions, with the possible exception of Dukes, are all public servants.
The “Non-Irish” executives are nominally in the so called “private sector”.
Besides, you’re only looking at the top level employess and board members here. The super-salary rot goes on down a few layers of the management chain in most of these places. Here’s the report from the Irish Examiner in the case of IBRC
I doubt you’d make a Commonwealth company out of this lot. I suspect there are a lot more Paddies, Fionns and Saoirses as you move down the ranks.
Bit of a conundrum,on one hand they are negotiating/structuring very large complex transactions.
If they cant negotiate ‘good’ salaries/packages or get a ‘bad’ deal do you want them,patriotic duty or expecting altruistic experts to apply is not viable.Executives should have skin in the game.
The metrics are all wrong ‘pay’ should be performance related and back end loaded.Split the spoils,if there are none,tough you lost.
Guarantying salaries at NAMA creates inertia,just sit on the file and don’t break anything,the level of hand holding is ludicrous.
Remuneration in commercial RE should always be based on eat what you kill,their should have upside but also downside.
Hence the preponderance for Vatican level secrecy and off market deals,legions of advisers,paper the file and cover your ass..but,but we had a ‘valuation’ done..
1. Is there any indication that the NAMA salary cuts were 100% Irish? If not, your schema collapses. Just as with the IBRC point, in reverse, made by OMF.
2. “And they might say, why should they offer pay-cuts, they’re not Irish and not expected to put on the “Green Jersey” but if the evidence is that Irish peers will accept paycuts in a sector which is largely controlled by Minister Noonan, then maybe we should be seeking personnel changes.” Irish “peers” will accept paycuts because they have fewer alternatives. In universities too, as pay has been cut, non-Irish staff have left – in a university department I know well, ALL the non-Irish staff who were here pre-crisis have left. Yes the Irish “peers” are accepting paycuts, but that does not mean that quality is being maintained. Rather, the reverse.
3. I think Honohan’s pre-CB salary as a TCD professor was lower than Elderfield’s pre-CB salary as a Financial Regulator. If so, Honohan was arguably handsomely overpaid in the first place in terms of the money required to induce him to do the job.
4. Was the pre-Elderfield head of Financial Regulation an Irish fellow? Perhaps we could have him back if he offers to underbid Elderfield’s remuneration.
Halloween is over! Don’t be giving people a fright like that.
Minister Noonan could always apply a marginal 100% Universal Social Charge for *all* remuneration above 500k if he wanted – for all public servants, civil servants and bodies over which the government has more than a 50% control. Salaries given could be as high as they like, but anything above 500k would just go straight to the exchequer.
Comment to FT editor on “Dublin’s shame”-
What a poor article and an editorial at that. Whilst I fully agree with the editorials general thrust it displays a typical lack of local understanding about Irish issues, the real facts, the differences with the UK. It ignores the collective responsibility in Eire that contributed to these issues. It lays the accusers, and not just the attempt at a sound bite from AIB’s new puppet like CEO (who I recollect readily dished out big pensions in his investment banking past and then not a peep about retrieval) in this matter bare to hypocritical. For instance, how come you didn’t bring out the current scandal about their PM being paid more than ours, Merkel, Holland etc? That despite the arrival of the Troika who are swanning it in Dublin’s best restaurants etc the politicians have just paid themselves outrageous pensions, perks etc and which is a current scandal ! That old Anglo Irish bank are back to their old tricks paying enormous salaries again-Their CEO’s perks and pensions in 2010 were greater than the PM’s salary-another front page scandal but ignored by you! That Bank of Ireland gave the two fingers !! That those public servants involved in this crisis have not been targeted and continue to languish. And your argument ignores the legal differences, the individuals rights, the moral issue of trying to single one section and not others. And what gives you the right to determine the correct pension correction-what was your basis, knowledge of the man or matter. I pay good money for good journalism to support my decisions. Next time do some good old fashioned spade work rather than getting dragged into a foreign issue that you have badly, or frankly could not have had the time to research, because its suits your UK bankers renumeration agenda. And think your conclusion through. Poor to lazy journalism me thinks and not the type I pay good money for to support my business decisions….
Dear Activist