Executive Pay

I note that the salary of the incoming Head of Financial Supervision, Matthew Elderfield, is far greater that that of his new boss, Patrick Honohan. Could he be using AIB to justify his own headhunting activities.

Apparently Elderfield took a pay cut to come here mind you. Along with some positions in the NTMA the HFS would seem to be one of the positions that would warrant very high pay to attract international candidates.

If I may take slight objection to your comment re Maurice Manning.

He was not, to be fair, a middle ranking Senator or Academic. He was both the Leader of the Seanad and the Leader of the Opposition in that house. Hardly middle ranking. He was senior lecturer in Politics, now adjunct professor, in UCD for thirty plus years, holds a PHD in the same discipline, and was on the Governing Authority of UCD and served on the Senate of the NUI for decades. He is now Chancellor of the NUI. He was visiting professor at the University of Paris (Vincennes) and the University of West Florida. He was also a member of the European University Institute, Florence.

In relation to his salary, the act setting up the Commission envisages that the President may be a High Court judge and the salary is set at that rate. It was not a negotiated rate.

He has taken a 10% voluntary reduction in that figure and, I see, you fail to mention, that he is forgoing his Dail pension, worth in excess of 45k per annum, unlike others.

Writing in a vacuum is fine, but if you give all the details, the picture is slightly different than you present.

Saying all that, I agree that salary is too high, but you might be a little more complete in your commentary.

Peter
As Frank Barry said and as you confirm, a middleranking academic and politician. Leaving aside the issue of how “rank” the senate here is there are literally hundreds of senior lecturers, perhaps thousands, in all sorts of disciplines in ireland. And a fine body of people they are. Many of these have served on the executives of whatever institutions- and many have been VP’s in US universities (where, btw, the term Visiting Professor is exceptionally elastic in its application).
Thats not to knock Maurice but to strengthen Frank Barry. Great that he is foregoing his dail pension but hey, on 300k plus its not going to leave him in penury.

How about this – a salary cap across the public sector of 200k…..Public sector to include any institution in which the state has 25% of the voting rights.

“something wrong” indeed.

Chancellor of the Exchequer Gladstone’s complaint in a letter to his wife about the Irish lobbying for funds for the Galway Packet Co. mail service in 1859, could be written today. “The scene was sickening and all the Irish were there, most of them vying with each other in eagerness to plunder the public purse.”

Putting the pay of the chairman of the human rights commission or the ombudsman at the level of a high court judge is ridiculous.

When the head of the National Consumer Agency and the current ombudsman, moved from the private sector, they both got huge hikes in salary.

In 2007, the Dublin City Manager was less than 2 years in the job; he didn’t ask for an increase but was given a hike of 36% and his 2 predecessors had their pensions raised by 36%.

On non-salary spending, sadly the mentality of insiders and vested interests, is grab what they can, while the going is good.

The State is the biggest purchaser of goods and services in the economy but cartel type fees are accepted as the norm while Competition Authority reports are binned.

Wonder how many annual audit fees have been renegotiated in recent times directly by the public service and the 800 quangos/agencies?

Why does the State act as the patsy in paying daily legal fees of €2,500 – €4,000?

The senior civil servants voted for strike even though, together with the politicians, they have been responsible for avoidable damage to the lives of tens of thousands of their fellow citizens.

This aspect of responsibility or irresponsibility is generally ignored because the powerful retain a firm grip on the public megaphone. Besides motive is not an issue.

However, the monumental mismanagement and the primacy of self-interest over common interest, has had devastating consequences for some citizens.

@Frank Barry
It is amazing how Irish bank boards scour the world and then find the perfect candidate was sitting right beside them all along, since 2003, during the period when their institutions went belly up. It is like a nightmare version of those schmaltzy American movies celebrating the superiority of the small town but with a bit of unintentional comedy.
An Irish “Carry on Banking” combined with “Halloween”.
The weekend’s coverage raised two points.
Firstly, how did the even worse off banks of Nationwide and Anglo manage to get external candidates. Surely AIB and especially BOI should have been highly attractive to outsiders. This is simply incredible.
From Matt Cooper’s article:
http://www.timesonline.co.uk/tol/news/world/ireland/article6926806.ece
“How the state’s “public interest” directors on the AIB board, Dick Spring and Declan Collier, came to support Doherty is extraordinary, especially when you consider that Spring was tanaiste when AIB needed rescuing 24 years ago during the ICI debacle”.

Secondly there is the issue of the salary cap. In what sense is 500,000 the limit. “There is no mention, however, of his pension, expenses or potential bonus, all of which will increase his gross income.” This cap is another Lenihan special. Look at Boucher:

http://www.businessandleadership.com/news/article/17763/leadership/boucher-to-earn-eur620-000-despite-eur500-000-salary-cap

Boucher has hit €620,000 already, and who knows how much more will be added on by a grateful board. The more he gouges from the taxpayer the greater his remuneration.

I fully agree with Cooper’s conclusion:
“The Boucher and Doherty incidents give the lie to the notion that the government is serious about adopting a “clean slate” approach to Irish banking”.

This is a menial level discourse. I submit that the more arrogant a person is, and the more supine the group of sycophants he (not usually a she – but who knows!) musters about his person, the more he can dictate and command by way of obscene remuneration.

It is not, and never will be, except in a very limited number of commands, about technical merit – its about power over (aka. willy-waving). Would these brave and totally wonderful CEO persons care to spend some time down a mine? Not bloody likely! Now there’s a job that would make you a True Believer!

Please have a proper sense of proportion about this mess. Pay a man what he merits, not by the position he holds, but according to the minimum needed to purchase his necessaries – say x 6 times the average industrial wage.

There are many meritorious persons, with the minimum technical knowledge and expertise necessary to manage – what is in effect, a money lender’s office. The sky above AIB or what-have-you would not fall in if an outsider was appointed.

Please give some of us credit for not being complete PC slaves.

B Peter

@Brian Lucey,
Frank Barry’s number crunching and your respondse on Maurice Manning renumeration illustrates a two points a) academic politics is truly petty because of the small stakes and b) High Court judges are vastly overpaid.

Moreover, do you really want a salary cap of 200k across the public service. That is a very Statist solution that will undoubtedly end up with incompetant doctors, lawyers, secretaries general and indeed educators.

Much better to put a system in place that selects competant people to get us out of this mess. If we could find somebody competant to turn the ~Banks around a Stephen Hester like package of 10m euros would be small beer.

@JL
No, its not petty as the responder called for facts.
As for the cap – why not? The vast majority of professors are paid well below that (associate professors 50% of it), and as for the doctors….imaine an advert in the lancet “wanted, consultants, £185,000 pa.” no shortage of applicants I warrant.
We have an assumption here, in this country, that we must overpay. Why?

For the AIB job, here are a few observations.

First, EUR 500k is not bad money, even at higher tiers of the likes of Goldman Sachs. It’s not what you might want, but I daresay it’s enough to ‘slum it’ for a few years.

Second, are we being at all clear about what we want from the CEO of AIB?

Do we want a CEO who is entrepreneurial and proactive in growing the bank? This is what the markets would expect from the CEO of a small, restructured company that was entering a period of major change in its industry.

Or do we want a CEO who is just a steward, a ‘staid banking practices’ guy – more of the same, but less of the dodgy stuff – ? This seems to be what Frank Barry expects. It may well be what the government, which is the major shareholder expects too.

Any potential CEO you can think of is certain to be a complete failure in at least one of these areas and is likely to sustain major damage to his or her reputation as a result.

It is not surprising that outside candidates are unwilling to drink from this particular chalice, at least not without being paid a major premium to go towards their pension funds.

My biggest concern would be that a ‘staid banking practices’ CEO is not what AIB needs at the moment. Banking is rapidly changing AIB needs to change and grow, or to merge and die.

@ B. P. Woods

When you consider that former BOI chief Soden recommended Aynsley for the Anglo role everything in Irish banking looks even more incestuous:

http://www.tribune.ie/article/2009/aug/23/soden-plays-kingmaker-role-in-anglo-top-job/

“I put his name forward to the government. I sent his CV to Donal O’Connor because he is one of the few people in the world who is capable for this job,” Soden said.

You have to wonder why AIB and BOI could not find anyone from Sweden or who had managed a British bank in the early nineties, or indeed another Australian as one of Mr Aynsley’s attractions was:
“Aysnley also has knowledge of cleaning up distressed assets when he returned to his native Australia following a bursting of a property bubble there in the 1990s, Soden said”.

As for the paycap that put off the external candidates for AIB and BOI:

“Asked why Aynsley was prepared to accept the Anglo job, which comes with a pay cap of €500,000, Soden said: “He is a brilliant guy and sees this as a huge challenge. If I suspect he comes up [well] from this position somebody will grab him,” in Ireland or elsewhere.”

Speaking of unadvertised candidates it all reminds me of this:

http://www.irishtimes.com/newspaper/ireland/2009/1029/1224257603300.html
“Minister for Finance Brian Lenihan said a procedure had been set out whereby an appointment would be made after he had consulted with the National Treasury Management Agency (NTMA) and the chairperson of the Nama board.

Mr Lenihan said it was “unlikely” that the post would be advertised, given the speed in which matters had to be decided”.
Add in Cowen’s condemnation of FOI and we can see that, as Michael Hennigan has pointed out, the people who run things believe the problem is too much scrutiny.

Incidentally the Tribune article was subtitled:
“new boss may lead third banking force involving Anglo, EBS and Nationwide.”
Given that Brian Billionloss and his predecessor are probably the two worst finance ministers of West European democracies since World War 2,
I fear that this move can only result in the total destruction of EBS.

There is a simple solution to the banks running rough shod over the taxpayerar at every turn. The government announce to the markets that they are pulling 50% of all promised funds to any institution that fails to follow governement guidelines on pay and bad practice. Watch the stock price collapse and the shareholders will actually finally kick up a stink. Then when the bank in question decides to ignore everyone, follow through with the message that no bank is too big to fail and pull the funds.

From poster MsAnneThrope on politics.ie:
http://www.tribune.ie/business/article/2009/nov/22/banks-in-cash-crisis/

“Several industry sources said that the banks are extremely unhappy with some of the valuations as they believed the properties were worth more than they are now being told”.
Beware of this cheap talk about how tough the NAMA valuers are being. 50% down from peak plus an LTEV – the chief valuer was supremely confident of this. I would treat these toughness claims in the same way as we now treat the claims of Lenihan to have transformed the culture of Irish banking. As Morgan Kelly said of Lenihan, the NAMA lobby are masters of steaming misleading nonsense. Beware too of using the banks standards of toughness. They live in a world of their own – that’s why they can never find outside candidates.

Remember kids, the correct standard of proof for the NAMA lobby is:
No assertion by the NAMA lobby should be believed unless it is in writing, legally binding, irrevocable and available for inspection.
No commitment by the NAMA lobby should be believed unless it is legislated for, implemented and is being policed by an independent expert, preferably non-Irish, of huge experience, unimpeachable integrity and reporting regularly to the Oireachtas.

This already applied to the length of time the ECB “deal” lasts.

In summary:
We must assume there is no long-term ECB deal and that the NAMA valuers are using 50% from peak plus the LTEV. Until proven otherwise they are being as tough as the Andrex puppy.

I agree with Brian Lucy. Why do we feel the need to overpay for those who work at the higher level of our public service and our professions? The answer is simple.

When we gained our Independence our valiant patriots quickly decided that there was a lot of money to be made at this gig. They also decided that they needed professional expertise to run the country. So the professions were quickly assembled and a protected elite was established and lasts to this very day.

All the professions are self regulating and have strict laws on who and how many can operate on their well protected patch.

All pay in this elite is comensurate with the court of any Royal Fifedom from yester year.

It will not be reduced volontarily and all efforts will be made to protect it but eventually it will tumble as we are now entering the last months of Bourbon rule.

Now. That’s much better folks. Keep it up. We won’t change behaviour, but we might pick up a few more disciples. Keep the attack on the technical side – there is no defense against this. You need a license to own a mutt, but you can drive a money lender’s office with arrogance.

For the academically inclined: Chris Argyris (Skilled Incompetence).

B Peter

@MB
Just looking at some old posts on this site:
Article of Feb 20, 2009 referenced:

http://www.irishtimes.com/newspaper/finance/2009/0220/1224241489832.html

“Dr Bacon was appointed “special adviser” at the National Treasury Management Agency this week for three months to enhance the agency’s team as it continues its work on recapitalisation. He will report to Minister for Finance Brian Lenihan.

It is understood Dr Bacon will focus solely on assessing a possible risk insurance scheme or bad bank for the Irish banking sector”.

I had somehow developed the impression (I wonder how) that Bacon considered all the options and came up with NAMA which Brian Lenihan reluctantly accepted. Now I’m wondering was it the NTMA special team. But I’m guessing if you asked them…
Maybe it just fell from the sky.

“Dr Bacon declined to comment. A spokesman for the Department of Finance was unable to comment on the nature of his work”.
The less they know the better, even then.

@ Brian Lucey
I agree with you up to a point. We have overpaid for everything here up to now, lower levels of the public service, upper echelons of the public service, judges, pols, academics, middle mgmt in banks, top bankers and plumbers.
However, to impose an arbitrary “picked out of thin airor even the rar oriface” salary cap of 200k or 500k or whatever is not the way forward. You identify the technocrat for the job that you want done and you pay the going rate. For some jobs its lower, for a SG of a govt dept its lower, for a mid range executive its lower but for a competant CEO of a bank with a track record it is almost certainly higher.

You are right that we have paid Trapp wages for Staunton performance and look where it has got us. However, switching to Staunto wages and expecting Trapp performance will not work. It will lead to Staunton levels of performance.

@All

Another jewel from the archives on Dec 23, 2008:

“This post was written by Kevin O’Rourke:

Was I the only one to find the following snippet from the Irish Times astonishing?

“It has emerged that the Government increased the size of its planned investment in Anglo by half in the final hours of talks. Mr Lenihan was offering €1 billion up to lunchtime on Sunday but raised the offer to €1.5 billion in the face of tough negotiation by the bank””.

Now come on, Mr O’Rourke, it was Christmas, don’t be such a scrooge.
Even Vader is affected by the holiday spirit.

But remember, when you hear how tough the NAMA valuers are being, just remember this piece of “tough negotiation”.

First, EUR 500k is not bad money, even at higher tiers of the likes of Goldman Sachs. It’s not what you might want, but I daresay it’s enough to ’slum it’ for a few years.

According to the white times, the avg. renumeration of a Goldie is about 770k dollars in 2009.

From across the pond, here’s an NBER paper (paygated, sorry), on executive compensation from

Abstract
n this paper we describe the important features of executive compensation in the US from 1993 to 2006. Some confirm what has been found for earlier periods and some are novel. Important facts about compensation are that: the compensation distribution is highly skewed; each year, a sizeable fraction of chief executives lose money; the use of equity grants has increased; the income accruing to CEOs from the sale of stock has increased; regardless of the measure we adopt, compensation responds strongly to innovations in shareholder wealth; measured as dollar changes in compensation, incentives have strengthened over time, measured as percentage changes in wealth, they have not changed in any appreciable way.

http://papers.nber.org/papers/w15426

http://www.finance.gov.ie/viewdoc.asp?DocID=5502&CatID=54&StartDate=01+January+2008&m=

Address by Minister for Finance, Mr Brian Lenihan T.D., to the IBF National Conference on 22 October 2008.

Appointed 7 May08 so he has had 5 months:

“As the turmoil lingered on into 2008, securitisation was the first source of funding to dry up, as the poor quality of US mortgage-backed securities and related derivatives became evident and investors became wary of even triple-A rated offerings. Things worsened considerably when the big US investment banks came under stress and, for Europe, the failure of the 158-year-old Lehman Brothers was a tipping point for the recent unprecedented turn of events”.

Damn you US mortgage-backed securities and related derivatives!
Damn you Lehman Brothers!

“…I might just take a few moments to reflect on the Government’s recent actions to maintain financial stability in Ireland and to underpin confidence in our financial institutions in the wake of the unprecedented turbulence and uncertainty in the financial system internationally”.
Damn you unprecedented turbulence and uncertainty in the financial system internationally!

“In short, the State has undertaken to unconditionally and irrevocably guarantee the covered liabilities of the participating institutions until 29 September 2010”.

Yippee! Billions and billions lost!

“This support – granted in the strongest and most explicit legal terms – is being provided in the public interest to maintain the stability of our financial system and hence to protect the real economy from the consequences of the severe financial disruption that would otherwise arise”.

Instability from not guaranteeing existing debtholders of the flawless Irish banking system?

“The guarantee has as its central objective the removal of any uncertainty on the part of counterparties and customers of the covered institutions. In particular it is crucial to give absolute comfort to the investors in debt securities of Irish banks that their debts are guaranteed in full by the State during the period of the Scheme and that depositors know that they have the full protection of the State”.
Interesting that he put the debtholders first.

“The goal, at the end of the two year guarantee period laid down in the legislation, is a banking system that is ‘fit for purpose’ for the transformed financial environment in which it will find itself operating in the coming decades”.

One year and one month gone already and banks unfixed. Now he is talking about extending the guarantee.

“….In the meantime, we are going to have to work our way through a slowdown in world growth. This is having, and will continue to have, negative consequences for our own economy, and these too have had to be addressed in a robust manner by the Government”.
Damn you world!

“But the banking sector must also play its part.
The Government, on behalf of the community at large, has performed a major service for the banking community. The onus is now on the boards and senior executives of the banks to meet the legitimate expectation that now exists that they will see as their first priority the goal of ensuring that the flow of finance is channelled appropriately to support and underpin sustainable economic activities on the necessary prudent, responsible basis that is clearly in the interest of both the bank, the borrower and the wider economy”.

One year and one month later:
Boards and Senior Executives kept on. Insiders appointed. No legislation. Insufficient lending. NAMA.

How has Brian Billionslost done?

@Stephen Kinsella
I think we need to benchmark our bankers against Europe excluding the UK. The boom went to their heads. It’s time they were made to realise they’re not Wall Street – they’re Dame Street.

@jl
“You are right that we have paid Trapp wages for Staunton performance and look where it has got us. However, switching to Staunto wages and expecting Trapp performance will not work. It will lead to Staunton levels of performance.”
I daresay you can see a logic in that conclusion jl but it sure escapes me. If we paid high wages and got poor performance, all it proves is there is no direct link between remuneration and performance. I often notice that the higher paid, especially those in control of the purse strings, who tend to be the same, are fond of justifying their higher salaries using the nonsensical but self serving phrase ” you pay peanuts, you get monkeys”.

Two thoughts re the appropriateness of salary levels and ‘in house’ appointments:
1. Are our banks of comparable scale to the international ones who pay the large salaries?
2. The sentiment that “those whose actions led to this debacle are not the ones to give leadership out of it” will never find favour with the current goverment

Why do we have to import expertise surely we are capable of growing our own talent.

The ingrates that formed and still form our Banking elite have no expertise other than the knowledge of the politics of their own Bank. In most cases these powerhouses of International Finance never worked outside their own Banks.

Protecting their patch from hungry newbloods is their area of expertise. No international Bank would touch them with a bargepole yet they have managed to convince our Govt that they are indispensible.

The old boys network that exists between our civil service and the top professions makes sure that the circle of power is both small and tight.

The newbloods will have their day soon as they are growing more and more restless.

My reports tell me average pay in gs is supposed to be 650k $ this year. So 500k € isn’t bad. Anyway the point isn’t the salary. The point is ambition, achievement and a big payoff. None of which there is much prospect of at aib.

Anyway I would counsel strongly against putting an investment banker in charge of a retail bank. Retail bank is about operations, not deals.

We are slowly turning our banks, which should be duelling innovation and development, into an unofficial division of the civil service. No good can come of it.

@Aidan McGrath
” you pay peanuts, you get monkeys”. This used to be a favourite of Mary Harney regarding our underpaid politicians. Thank God this was addressed.
Where would we be now if we were still underpaying our politicians!

Some more on the banks:

http://www.finance.gov.ie/viewdoc.asp?DocID=5553&CatID=1&StartDate=01+January+2008&m=

Announcement in relation to Covered Institutions
On 28th November 2008, Mr. Brian Lenihan T.D., Minister for Finance, stated:

“Today, I have asked the Institutions covered by the Government’s guarantee Scheme to consider the contribution that they can make to the economy through appropriate credit initiatives in relation to small and medium sized businesses and otherwise, and to come back to me on this matter within the next ten days.”

“These meetings followed on from the submission by the Central Bank and Financial Regulator to the Minister for Finance of a report on the financial position of the major financial institutions participating in the Government’s guarantee Scheme. The Minister has met with the Governor and the Financial Regulator to discuss the report which presents an analysis of the institutions having regard to their loan books”.

“The content of the report is confidential and commercially sensitive and the details cannot be disclosed”.

“The report confirmed that the capital position of each of the institutions reviewed is in excess of regulatory requirements as at 30 September 2008. The report also concludes that even in certain stress scenarios the capital levels in the financial institutions will remain within regulatory requirements in the period to 2011”.

We’re out of the woods. But wait…

“However, the Minister is aware that international capital market expectations in relation to capital levels in the banking sector have altered”.

“The Minister said that he welcomes the views of a number of institutions that they are open to raising additional capital, with a view to being better able to fulfil their full role in the economy, while ensuring that they remain strong and stable institutions with capital levels well above the normal regulatory minima”.
“The Minister noted that for certain institutions the need for additional capital may be very modest, whereas for others the need may be greater. He noted in that regard that certain institutions are already in discussions with potential investors, and he encouraged the institutions concerned to progress these discussions”.

Yaaaay! But wait…

“The Minister indicated that in certain circumstances it would be appropriate for the State, through the National Pensions Reserve Fund or otherwise, to consider supplementing private investment with State participation, where in doing so the aim of securing the financial system can be better met. In that regard, the Minister is open to evaluating proposals from potential investors which would add value to the security and stability of the financial system and its ability to contribute in a positive way to economic development”.

“The Minister indicated that it is a matter for the Board of each institution concerned to develop further their own plans for raising capital where appropriate. The relevant institutions have agreed that they will work closely with potential investors and the Government to develop matters further by the end of the year”.

Still, no major problems, our banks are fine, this should be easy to sort out.

But on Dec 11th a poster who has since gone on to greater things observed the following:

“Sheltering under the Irish Government’s guarantee, the Irish banks have survived massive falls in their share prices.

In each case the current market price is less than 10 per cent of its peak — 2 per cent in the case of Anglo Irish Bank. Value to book ratio (using the last annual accounts) varies between one fifth and one sixteenth”.

Time to recapitalize, then, I would guess. When the regulator finally decides to require them to increase their capital (not least to reflect the large foreseen losses of the “incurred but not reported” type), the Government will have to be ready to participate.
But how? For some ideas and a cautionary comment by an academic scribbler, see today’s Irish Times”:

I can’t open this article. But this comment by commenter D_E seems very prescient:

“The main question now is €10billion enough?
How long before the banks have to be re-recapitalized?”

@Aidan McGrath

You are correct that if anything there was an inverse correlation in the banking industry between renumaration and performance. However, the govts salary cap proves one thing. There is a going rate fora job. I don’t know what it is. However at 500k no international talent applied. So we are left with the survivors of the officer class that led us into trouble. Do you think this is a good idea? Do you think that paying 1m euros for a decent senior executive from outside the country would have been worthwhile?

Just a general comment on the salary cap: why have a cap at all?

Why not let market rates decide the cap BUT and this is the key BUT:

Have a regulatory requirement that an equivalent sum for all salaries to be attributed to the bank’s core capital for all officers of the bank above a certain grade; do likewise for bank bonuses that might be given to any category of bank staff. Apply a similar rule for deferred earnings, share options etc.

At least then the capital base of the bank would not be subject to erosion; instead it would reliably increase along with earnings. If this sum turns out to be too small, apply a multiplier to it. Is this too naive a suggestion?

@Brian Lucey We overpay because of low collective self-esteem. It’s false deduction from the ‘pay peanuts – get monkey’s’ theorem leading to the Emperor’s New Clothes public service culture we have in Ireland. If you pay a lot of money to someone then by definition they must be brilliant and world-class because, you see, if you pay peanuts you get monkeys.

Unfortunately what this means in Ireland is that we believe that paying monkeys vast sums of money will make them, somehow, non-monkeys.

In truth there are very senior people in public life in Ireland earning hundreds of thousands of pounds who, in the UK or US, not only wouldn’t have anything like their current jobs but who would be working in the lowest levels of management earning a fraction of what they earn now.

The Irish believe that if you pay more than a first world country then – he presto! – you are a first-world country.

@Frank
“Two thoughts re the appropriateness of salary levels and ‘in house’ appointments:
2. The sentiment that “those whose actions led to this debacle are not the ones to give leadership out of it” will never find favour with the current goverment.”
You are absolutely right. As you can see from Lenihan’s speech on 22 Oct 08 the government are responsibility phobic. They blamed everyone else for what had happened to our banking system and our economy – except themselves, the banks and the regulators. You can also see from this statement that Lenihan was quite happy with our bankers at that stage. He just wanted them to lend more.
Regarding the incestuousness of our banking system another example occurs to me:

http://www.independent.ie/national-news/conor-lenihan-lobbied-his-brother-on-bank-board-role-1927535.html

“Documents released under the Freedom of Information Act show that Conor Lenihan wrote to Brian four times over a three-week period recommending a number of individuals before it was publicly known that the appointments would be made.

While the Department of Finance refused to name individuals in Freedom of Information correspondence, the Irish Independent can confirm Mr Spollen was one of Conor Lenihan’s recommendations”.

“Minister of State for Integration Mr Lenihan recommended a number of individuals to his brother for the boards of the banks, as did several other ministers”.

@Paul McDonnell
You are right. We have League of Ireland standard banks but their “stars” are demanding Manchester City level wages. Because they’re worth it.
Senior staff at AIB/BOI who watched them being run into the ground are not staying because of their loyalty to the institution. If they were that loyal they would have resigned over its mismanagement.
They are motivated by:
(A) Having managed a bank on their CV
(B) 620,000 and counting of a remuneration package
(C) Who in their right mind would hire them? Even Scottish banks have a better reputation. With the exception of Iceland our bankers have the worst reputation in the Western (the entire?) world.

Looking at Lenihan’s statement of the 28th November the need for a full expert independent & swift inquiry into our banks and their regulation is clear. He claims to have been told the following:

“The report confirmed that the capital position of each of the institutions reviewed is in excess of regulatory requirements as at 30 September 2008. The report also concludes that even in certain stress scenarios the capital levels in the financial institutions will remain within regulatory requirements in the period to 2011″.

He might actually be telling the truth if he was being honest with McWilliams. But a complete culture change was needed in Irish banks, regulators and the DoF. He partially conceded this himself. But he has not delivered in relation to banks. Removing the top man in every organisation does not constitute a culture change. It’s a fig leaf.
We need a complete culture change in our government.

32 replies on “Executive Pay”