AIB chief to earn €500k wage

The new chief executive of bailed-out Allied Irish Banks (AIB) will earn the Government cap of half a million euro a year.

International banker David Duffy was appointed despite Finance Minister Michael Noonan rejecting calls from the lender to increase the salary threshold.

AIB said the 50-year-old has held a number of senior roles in the international banking industry, including CEO at Standard Bank International and the US division of ING Barings.

The Terenure College and Trinity College Dublin graduate will take up his post in AIB next month.

Mr Noonan wished Mr Duffy well in the important role of reinvigorating AIB, which is more than 99% State-owned.

He said the universal pillar bank was working for the Irish economy by supporting its personal and business customers.

“Given the importance of this role and the very large amounts of capital invested by the Irish State in AIB, the Government was determined that the bank should recruit a CEO, in accordance with prevailing policy, of the highest calibre so as to yield the best possible return to the taxpayer,” said Mr Noonan.

“The Government is pleased that the remuneration policy set down by the previous Minister for Finance, Brian Lenihan, in capping the salaries of bank CEOs has been applied to this appointment.”

Mr Duffy’s contract is for three years, with the option for renewal by mutual agreement, and includes a six-month notice period.

There are no benefit-in-kind payments, such as medical, club membership or car allowances, and if any occur they will be provided for within the €500,000 cap.

However he is entitled to vouched reasonable expenses for relocation costs to Ireland and provision of accommodation for a period of three months subject to board review.

Elsewhere, there will be an employer pension contribution of 15% along with an employee contribution of 5% to be paid in to the Bank’s Defined Contribution Pension Scheme.

The last man in the post – AIB’s former group managing director, Colm Doherty - stepped down in November 2010 with a €3m retirement package.

The bank’s executive chairman David Hodgkinson said the new recruit brings with him a wealth of international experience and a sound knowledge of the local market.

“He also has a proven track record in successfully managing banks through challenging times,” said Mr Hodgkinson.

“He is ideally suited to the task of leading AIB’s extensive restructuring and delivering the business performance that will best serve its customers and return the bank to sustainable viability.

“We look forward to working with him and wish him every success.”

Mr Hodgkinson will remain on the board of AIB in the role of non-executive chairman.