The Corporate Governance Association of Ireland (CGAI) is concerned by speculation that AIB is to appoint an executive chairman on an interim basis having failed to reach agreement with the Government on the appointment of a Chief Executive.
The Combined Code which applies to all companies with a full Stock Exchange listing in Dublin and London requires that the two top roles in a company, the chairman and the chief executive, should be filled by different people. The Code allows for a company to depart from the Code provided it explains its reasons in its annual report. However, the proposed appointment would simply not be best practice.
“The various problems which AIB has encountered in recent years indicate a need for a board with strong independent non-executive directors capable of providing effective oversight of management,” said Jerry Kelly, Chairman of the CGAI. "The chairman is meant to be a neutral manager of the board’s processes and procedures. When the chairman of the board is also the head of the management team the objectivity of the chairman is potentially compromised. There is also a danger the non-executive directors become disempowered.”
The CGAI says that it is hard to understand how the Government, AIB’s largest shareholder, would agree to such a breach of the Code even on an interim basis as it sends out the wrong signals to the international investment community. It is also hard to understand when the Government itself recently promised in the Renewed Programme for Government to bring in legislation to require segregation of the roles of CEO and Chair in Irish banks.
ENDS
Issued on behalf of the Corporate Governance Association of Ireland by Walsh Public Relations.
Contact: JIm Walsh Tel 01 6613515 / 087 2541700
Note for editors
The Corporate Governance Association of Ireland (CGAI) was founded in 2006 by graduates of the UCD Diploma in Corporate Governance. It is a professional Association whose members have all qualified in post-graduate studies in governance. It was set up to promote high standards of governance in the commercial, public and voluntary sectors and to keep its members abreast of this ever-evolving subject through continuous professional development programmes. For more information visit;
www.cgai.ie