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Archive for April 3rd, 2012

The Paddy McKillen hearing in London’s High Court rumbles along with daily revelations about the lengths rich folks will go in pursuit of more riches. There is likely to be a focus on the hearing again on here once Derek Quinlan and NAMA executives get on the witness stand, but for now we get daily snippets which are germaine to NAMA – incidentally I see RTE appears to have pulled its reporter from the hearing which is now in its third week; I thought the London RTE bureau was staying open until September – ah well, I guess someone has to keep abreast of Pippa Middleton’s backside, or suchlike. Meanwhile the Irish Times and subsequently, the Independent both report an episode from yesterday’s hearing where one of the minions of one of the rich folks wrote in an email

“AB, I think it is in the public interest to know what Nama executives are paid. They are personally incentivised with the potential to earn millions in bonuses. It is time to increase the temperature of the water”

This email was written, it seems, in the context of the Barclay brothers trying to prompt NAMA into making a decision about Derek Quinlan’s loans – which has been transferred to NAMA – in favour of  the Barclays so that they could strengthen their control of Coroin, the company that ultimately owns three of London’s greatest hotels, Claridge’s, the Berkeley and the Connaught. The Barclays, it appears, were becoming impatient with what was said in court to be NAMA’s delays in making a decision. When asked about the email yesterday, its author is reported to have said that he now didn’t know what the email was in reference to.

The email comes as a bit of a surprise on here. NAMA’s CEO, Brendan McDonagh, is widely understood to be entitled to a maximum of a 60% bonus on a €430,000 salary – though it should be said that (1) Brendan has for 2012 accepted a one-year 15% reduction in his salary to bring it down to €365,000 and (2) Brendan has waived his bonus in its entirety for both 2010 and 2011. But apart from Brendan McDonagh, what are NAMA’s bonus arrangements?

For 2010, we know that the NTMA, the parent organisation of which NAMA is a part, reported

“While performance related pay is an integral part of the NTMA model, the average bonus paid to staff at the Agency in 2010 was €7,681.  Agency staff are also subject to the Public Service Pension Deduction.   In total bonuses represented 6.6% of overall payroll costs at the Agency.  Since the end of 2009, the Agency has secured 11% reductions in payroll costs [including bonuses] on a like for like basis” and that in 2010, the NTMA paid €1,981,760 in bonuses to 258 staff – an average of €7,681

But (1) we don’t know how much of the bonuses went to NAMA staff and (2) we don’t have figures yet for 2011 and (3) there is no information on individual bonuses but we understand from a Committee hearing that the highest wasn’t more than €100,000 at NAMA.

Interestingly there was gossip last week that NAMA staff were on a go-slow and leaving the NAMA HQ at Treasury Building at 5pm each day on the dot in protest at an alleged decision to withhold 2011 bonuses – it should be stressed this hasn’t been in any way verified, but doubtless we will learn in the weeks ahead what bonuses have been paid by the NTMA/NAMA for 2011, but I don’t think they will be substantial.

But could an executive at NAMA “earn millions in bonuses”? Well, if NAMA winds up in 2020, that’s another nine years between 2012-2020 so 9 years*€258,000 would be over €2m and that’s potentially what Brendan McDonagh could earn. What about the others though? In particular, are NAMA’s portfolio managers incentivised with bonuses? I certainly hope they are, these are the people you want thinking 24 hours a day how to make more money for NAMA! But what are they paid, and are their bonuses potentially worth millions of euro? And if NAMA’s clients think they can “increase the temperature” by putting this information – and how do they know, does NAMA’s HR department have leaks? – in the public domain, then shouldn’t NAMA act pre-emptively to remove this potentially extortionate risk? NAMA rarely comments on staff matters, so I guess another route will need be found to get at this information.

UPDATE: 3rd April, 2012. It seems that in 2010, no-one in NAMA was awarded a bonus in excess of €50,000 – “Deputy Doherty asked how many bonuses in excess of €50,000 were paid in NAMA. The reality is that the only individual in NAMA who was awarded a bonus of in excess of €50,000 was the chief executive but it is important to say he waived that bonus.”

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