Fianna Fáil Spokesperson on Social Protection Willie O’Dea has published legislation to crack down on big bonuses for senior bank staff over the next five years.
The Bankers Bonuses Bill (Credit Institutions Stabilisation Amendment Bill 2012 – see full text of Bill below) would restrict bonuses of over €1,000 paid to bank employees on basic salaries of over €60,000 a year.
Deputy O’Dea explained, “Given the state of the banking sector at this time it is not acceptable that bank bosses would continue to get large bonuses that simply do not reflect the current job market or the performance of the sector.
“We need to end short-term incentives for senior bank staff and move to a longer-term system of performance based bonuses. This is a simple piece of legislation that would require all of the covered financial institutions to defer bonuses of over €1,000 to staff on salaries of over €60,000 for a 5 year period. Where the employee’s performance has been exceptional or where there is a contractual entitlement to a bonus, the employee would receive the payment after 5 years under the condition that they have not been directly involved in the bank losing more than €100,000 during that period.
“The bank would be required to invest all deferred bonuses in an interest bearing account that is independently managed on behalf of the employees.
“This is not about taking small bonuses from hard working bank staff who earn a small boost at Christmas. This is about stopping a situation that we have seen all too often in the past, where bank bosses earn excessive bonuses while jobs are cut and performance remains weak. Bonuses should be discretionary payments for exceptional performance, and not the norm as they have become.
“The Government has an obligation to ensure that the State covered institutions behave responsibly when it comes to bonuses and benefits. I intend to move this Bill in the Dáil in September and I am urging the Government to consider it carefully.”
____________________ CREDIT INSTITUTIONS (STABILISATION) (AMENDMENT) BILL 2012
Mar a tionscnaíodh
ARRANGEMENT OF SECTIONS
1. Title and Commencement.
2. Insertion of section 50A into Part VI of the Credit Institutions (Stabilisation) Act 2010.
ACTS REFERRED TO
Credit Institutions (Stabilisation) Act 2010 36 of 2010
Credit Institutions (Financial Support) Act 2008 45 of 2008 2
CREDIT INSTITUTIONS (STABILISATION) (AMENDMENT) BILL 2012
AN ACT TO MAKE PROVISION FOR THE RESTRICTION AND REGULATION OF BONUS PAYMENTS IN EXCESS OF €1,000 MADE BY CREDIT INSTITUTIONS COVERED BY THE CREDIT INSTITUTIONS (FINANCIAL SUPPORT) ACT 2008 TO EMPLOYEES OF THOSE CREDIT INSTITUTIONS EARNING AN ANNUAL SALARY IN EXCESS OF €60,000 AND TO DEFER THE PAYMENT OF SUCH BONUS PAYMENTS FOR A PERIOD OF FIVE YEARS AFTER THE DATE UPON WHICH THEY HAVE BEEN EARNED IN ORDER TO ENSURE THAT THE BONUS PAYMENTS ARE JUSTIFIABLE AND MERITED.
BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:
1.- (1) This Act may be cited as the Credit Institutions (Stabilisation) (Amendment) Act, 2012.
(2) This Act comes into operation on such day or days as may be fixed by an Order or Orders made by the Minister for Finance.
2.- Part 6 of the Credit Institutions (Stabilisation) Act 2010 is amended by inserting the following section immediately after Section 50:
“50A.- (1) In this Section
(2) Where a relevant institution has entered into an agreement with an employee of that institution that entitles that employee to be paid a bonus payment in excess of €1,000 as part of the employee’s income and where the employee’s annual salary exceeds €60,000, the relevant institution shall:
(a) defer payment of that bonus payment to the employee for a period of five years from the date upon which the entitlement to the bonus payment has accrued;
(b) notify the employee in writing on the date upon which the entitlement to the bonus payment has accrued of his or her entitlement, subject to subsection (3) of this Section, to receipt of this bonus payment on the date five years after the 4
date upon which the entitlement to the payment has accrued.
(3) The employee shall be paid the bonus payment by the relevant institution on the date five years after the date upon which the entitlement to the bonus payment accrued, provided that:
(a) the employee, in the reasonable opinion of the relevant institution, has not been directly involved in any aspect of banking or marketing of financial services carried out by the relevant institution that has had the effect of causing that institution to lose more than €100,000 in the preceding five years; or
(b) the work carried out by the employee on behalf of the relevant institution in respect of which the entitlement to the bonus payment has accrued, has not, in the reasonable opinion of the relevant institution, resulted in or contributed to the relevant institution sustaining a loss of more than €100,000 in the preceding five years.
(4) During the five year period from the date when the employee’s entitlement to a bonus payment has accrued until the date when payment is due to be made, the bonus payment shall be invested on behalf of the employee in an escrow account which shall be independently managed for the employee, and other employees whose prospective bonus payments have been paid into that account, by the relevant institution.
(5) The relevant institution shall take all necessary steps to ensure that the bonus payments in the escrow account are 5
deposited in an interest bearing account held by the relevant institution.
(6) Where the bonus payment takes the form of stock options, such options shall be exercised on maturity if they are profitable at the date of maturity, and the money so generated shall be deposited in an escrow account held by the relevant Institution for the benefit of the employee.
(7) An employee of a relevant institution shall not be liable for the payment of tax on any bonus payment until such time as the employee has received payment of the bonus payment.
Bonus Payment” means any payment in excess of €1,000 to which an employee of a relevant institution becomes entitled pursuant to his or her contract of employment with the relevant institution other than the employee’s agreed salary or legitimate expenses. 3