Rabbitte says end big bank pay-offs

STATE-controlled banks should be prepared to cut excessive severance packages for senior management even if it results in legal challenges, a Government minister has said.

Communications Minister Pat Rabbitte questioned why the banks were paying massive sums to departing senior management when the institutions had clearly under-performed.

He said the bank boards should not pay the full remuneration packages in such instances, even if they were provided for in contracts.

The banks should decide to cut the packages and leave the senior executives “test it” in the courts if they were unhappy, he suggested.

Mr Rabbitte was reacting to the fact that former AIB managing director Colm Doherty received total remuneration of €2.7 million from the bank for 2010.

This was despite the fact that Mr Doherty had agreed to step down as a result of the bank requiring a second bailout from the state.

Mr Rabbitte, speaking to the Sunday Business Post, said there was a difference between private-sector performance-related contracts and the remuneration afforded to chief executives of the bailed-out banks.

“It’s true that, in the private sector, there are huge remuneration packages, but they’re related to performance,” he said.

“So I’m damned if I can understand how somebody who has driven the company onto the rocks is entitled to his full contractual entitlements without any question.

“The only way that can be tested is for the board who has the authority not to implement those packages, and when someone like Colm Doherty is forced out, to test it and then let him do what he will. If he wishes to test it, then let him test it.”