The legal position is that any director appointed to the board of the covered institutions whether under the Credit Institutions (Financial Support) Scheme 2008 or otherwise is subject to the requirements of company law in relation to the discharge of their responsibilities as a company director. As such, the director is legally bound to act in what he or she believes are the interests of the separate legal entity that is the institution itself. To address the scope for actual and perceived conflicts between the fiduciary duties of the directors of financial institutions under company law and the wider public interest in circumstances where those institutions have received financial support from the State, legal clarity, not just to the role of the public interest director but to that of the entire boards of those institutions, was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010. It provides that the overriding duty of directors of the covered institutions relates to the public interest as set out in the Act. Accordingly, public interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance and therefore no formal report has been produced by them for either the Minister or the Department of Finance. As stated in my reply to PQ 49478/12 there are currently no public interest directors on the board of IBRC. However all appointments to the board of the bank are approved by the Minister for Finance under the terms and conditions attaching to the nationalisation of the bank. The Minister for Finance has extensive powers in relation to the appointment and removal of Chairpersons, CEO’s and ordinary board members under the Anglo Irish Bank Act 2009. Mr Alan Dukes had been appointed as a public interest director in December 2008 and was made Chairman of Anglo Irish Bank in June 2010.
I have previously provided information on the remuneration and the terms in office of the public interest directors, including in response to PQ 49980/12. For the record the public interest directors, their dates of appointment/resignation and the fees they earned in 2011 are shown in the table below:
|
Bank
|
Public Interest Directors
|
Date of Appointment/Resignation
|
Fees 2011 €
|
|
AIB
|
Mr Dick Spring
Mr Declan Collier
|
January 2009
January 2009/June 2012
|
59,000
71,000
|
|
BOI
|
Mr Tom Considine
Mr Joe Walsh
|
January 2009
January 2009
|
90,000
79,000
|
|
PTSB
|
Ms Margaret Hayes
Mr Ray MacSharry
|
December 2008
December 2008
|
64,000
56,000
|
Dr Michael Somers is a Government Nominee (not a Public Interest Director) appointed to the AIB board on 14 January 2010 under the terms of the NPRFC’s investment of €3.5bn in AIB of May 2009.
The public interest directors at Bank of Ireland do not have a specified time in office as stated in response to PQ 49476/12. The same situation applies to the public interest directors at AIB. In PTSB, as stated in PQ 49482/12 the public interest directors were appointed until 30 September 2010 but have remained since that date as a replacement Government guarantee scheme has remained in place since then. The Memorandum and Articles of Association of the company require each director to retire every third year but in practice each public interest director has been subject to re-election by shareholders at each AGM since their appointment.
In general the setting of remuneration policies at the covered institutions rests with the Remuneration Committee of each institution. The terms of reference of the Remuneration Committee are accessible on the website of each institution. These can be found at:
AIB: http://www.aib.ie/servlet/BlobServer/document.pdf?blobkey=id&blobwhere=1136826158582&blobcol=urlfile&blobtable=AIB_Download&blobheader=application/pdf&blobheadername1=Content-Disposition&blobheadervalue1=document.pdf
Bank of Ireland:
http://www.bankofireland.com/about-boi-group/corporate-governance/court-committees/terms-of-reference/
PTSB:
http://www.irishlifepermanent.com/corporate-responsibility/corporate-governance/board-committees.aspx
Both Bank of Ireland and PTSB have a public interest director sitting on the Remuneration Committee. The public interest director will have a vote on decisions being considered by the Remuneration Committee but they do not have any powers to veto such a decision, nor can they act unilaterally to address salaries paid to particular employees. In the case of AIB there is currently no public interest director on the Remuneration Committee. Declan Collier, who was a public interest director of AIB, served on the Remuneration Committee until his resignation from the board in June 2012.
As the Deputy will be aware officials in my Department have been working with Mercer on a remuneration review of the covered banks. The report will provide a comprehensive and professional analysis of remuneration structures and levels across the covered banks both now and before the onset of the banking crisis.
