Seán Sherlock (Cork East, Labour)
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Question 9: To ask the Minister for Finance if the policy of curtailing performance bonuses in all financial institutions covered under the Government guarantee, as outlined in section 5.16 of the Covered Institutions Remuneration Oversight Committee report, is being adhered to; if he will confirm that no bonuses have been sanctioned in 2009 or to date in 2010; if he will further confirm that he does not propose to sanction any bonuses in these institutions while the Government guarantee is in place, as recommended by CIROC; and if he will make a statement on the matter. [25643/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Covered Institutions Remuneration Oversight Committee (CIROC), which was set up under the terms of the Credit Institutions (Financial Support) Scheme, reported to me on 27 February 2009. Its remit was to oversee all remuneration plans of senior executives of the covered institutions. For this purpose, remuneration included total salary, bonuses, pension payments and any other benefits received from a covered institution and its group entities, or otherwise received by a director or executive arising from the performance of his or her functions as a director or executive.

Specifically regarding bonuses at section 5.15 of its Report, CIROC recommended that no performance-related bonus awards should be made to chief executives and executive directors for 2008 or 2009 and for the period of the Government guarantee.

I wrote to the chairpersons of each of the covered institutions on foot of the publication of the CIROC report seeking immediate action from the Boards to revise remuneration plans, which included the recommendations on bonuses. These recommendations were then to be incorporated in revised remuneration plans of the covered institutions to reflect compliance with the Act. The responsibility for ensuring that the recommendations of CIROC are implemented is a matter for the individual covered institutions and, in particular, their respective remuneration committees.

It can be seen from the publication of the respective 2009 financial statements of the covered institutions that the recommendations of CIROC regarding executive bonuses are been implemented. There has been no change in Government policy on this issue and the prohibition of the payment of performance awards to senior executives continues in force.

The financial landscape of the covered institutions has changed considerably since February 2009. The State now has taken effective control or made substantial investment in 5 of the covered institutions and all of the covered institutions continue to obtain the advantage and benefits of the Government Guarantee. This effectively means that through the terms of the respective subscription agreements and/or relationship frameworks the Government has implemented further controls on remuneration policy, including performance awards for senior executive, at the respective covered institutions beyond the provisions of CIROC.

I should point out that performance awards in respect of previous years for some senior executives have been paid on the basis that a legal entitlement in accordance with employment conditions existed. Also, a small number of bonus awards to other cadres of employees, below senior executive level, at respective covered institutions have been made, and will continue to be made, due to particular circumstances. For example, I authorised payment of performance awards to some call centre staff where the award was an integral feature of their overall remuneration. In other cases, on the basis of legal advice, that pre-existing contractual rights had been established to bonus awards approval has been provided – and I stress only on this basis - to allow these liabilities to be met.