OFFICIALLY, the outgoing managing director of AIB Colm Doherty will not be entitled to any “golden handshake” after this week’s announcement of his resignation as head of the country’s largest bank.
However, the 52-year-old bank executive is unlikely to suffer financial hardship as he will walk away from his €500,000 a year job with a substantial pension.
Mr Doherty’s annual salary in the final year of his short-lived reign was also the least lucrative for the former head of AIB’s capital markets division as he was forced to capitulate to Government pressure to impose a cap of €500,000 on the salary of leading bankers.
Mr Doherty earned a basic salary of over €2.9m between 2005 and 2009 with a maximum of €633,000 in 2008. During that period he also earned another €2.9m in bonus payments, although they ceased in 2007 as the scale of AIB’s exposure to the property bubble was exposed during 2008.
AIB also made pension contributions totalling €735,000 for Mr Doherty between 2005 and 2009, with a maximum sum of €179,000 in 2007.
When bonus payments and profit share contributions are also factored in, Mr Doherty received total remuneration of €6.75m over the previous five years.
In addition, he enjoyed generous share options during his career with AIB, although they are now worth considerably less as the shares which once traded at almost €24 were valued at less than €0.50 yesterday.
Mr Doherty’s resignation and that of AIB executive chairman, Dan O’Connor, comes after AIB was finally forced to face the reality that it needed another €3 billion from the Government by the end of 2010 to meet its capital requirements.
For most of the past two years, AIB tried to play down its exposure to gigantic losses on its loan book in an effort by the bank’s top executives to prevent it coming under state ownership.
It is understood the resignations of Mr Doherty and Mr O’Connor were a condition of the Government’s willingness to provide AIB with a second bailout in that short period.
Mr Doherty’s position was always looking vulnerable in the event AIB could not raise sufficient funds from the sell-off of some of its Polish and US subsidiaries, given he was controversially appointed as managing director against the express wishes of Finance Minister Brian Lenihan.
Despite mounting public outrage at the €50bn final cost to be borne by taxpayers for the Government’s bank bailout, Mr Doherty’s pension arrangements are protected by contractual entitlements.
Asked about potential pay-offs to secure Mr Doherty’s departure from AIB, Mr Lenihan declined to comment apart from remarking that any payments would be “in accordance with their contracts”.
Mr Doherty refused to comment on the issue.
In contrast, Mr O’Connor had no pension entitlement from AIB as he had no contract with the bank as executive chairman, nor in his previous role as a non-executive director.
Banking sources have also indicated that both men’s predecessors, former AIB managing director Eugene Sheehy and chairman Dermot Gleeson also left the bank without any special severance payments following their resignations.
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