Mary Upton (Dublin South Central, Labour)
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Question 240: To ask the Minister for Finance his plans to limit the pay and severance terms of executives in banks and other organisations which are receiving State bailouts; and if he will make a statement on the matter. [4671/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Section 47 of the Credit Institutions (Financial Support) Scheme 2008 (Scheme) requires each covered institution to prepare a plan to structure the remuneration packages of directors and executives, including total salary, bonuses, pension payments and any other benefit, so as to take account of the objectives of the Scheme.

The Deputy will be aware of the existence of the Covered Institutions Remuneration Oversight Committee (CIROC) established by me under the terms of the Scheme. The three member, independent committee will oversee remuneration plans of senior executives of the covered institutions. The relevant plans have been prepared and submitted by the covered institutions, and in line with timeframes set out in the Scheme, CIROC will report to me on or before 5th March 2009, making a recommendation where appropriate, on the compliance by the institution with the terms of the Scheme. The Scheme provides that if I consider, following the advice of CIROC, that the institution has not demonstrated how its remuneration policies for the year ahead will comply with Section 47, I may direct the covered institution to amend its remuneration plan so that compliance is achieved.

It is important to emphasise that one of the key features of this part of the Scheme is the requirement to orient a system of bonuses to create the appropriate incentives, incentives that point toward reduction in excessive risk-taking and that promote long-term sustainability. A covered institution may not enter into any contractual arrangement that provides for termination compensation or equivalent to be payable to any director or executive for the duration of the Scheme.

The Taoiseach announced in the House last week that in the context of recapitalisation of the banks, that he would expect director's fees to be cut by 25% and when they appoint their top executives there would be an upper limit on remuneration and that he would expect current levels would be cut by at least 25% as well.