After AIB recently indicated that they may have difficulties in recruiting a chief executive at a salary of under €500,000, Finance Minister Michael Noonan has reasserted that there is no reason to change the bank pay cap.
In the indication came in the form of David Hodgkinson, the executive chairman of AIB, stating last month that he would like to be able to begin looking for a new chief executive at the previously recommended pay cap of €690,000.
Mr. Noonan seemed to respond to AIB’s comments about the bank pay cap as if to say that AIB is not outside of the boundaries of the current EU legislation. As a result, AIB has told the government that they will be looking to appoint a new chief executive within the limits of the existing pay cap, and the position is supposed to be filled during the next few weeks.
In terms of potential candidates, AIB seems to have narrowed their search down to two potential chief executives – David Duffy (previously the senior executive at ING) and Brendan McDonagh (former head of the North American branch of HSBC).
While the bank has promised that they will be hiring an executive that will have a salary under the current bank pay cap, they have not yet given the government a proposal describing what type of salary, pension payments, and ancillary benefits the new chief executive will receive.
It is possible that AIB may propose a plan to compensate the new chief executive with incentives that are based on the recovery of part of the €21 billion that have been given to the bank and its new subsidiary (EBS) by the state.
In part of its largest restructuring in its 45 years as a company, AIB also recently hired Ronan O’Neill as the new head of corporate and commercial banking for all of its United Kingdom operations.
