A proposal to introduce a share scheme for executives at AIB is going to be blocked by the Minister for Finance, Paschal Donohoe.
A resolution, which is due before AIB's AGM next week, will put a formal executive share scheme before shareholders for their approval, but the minister said today that he intends to vote against this resolution.
AIB last month proposed a plan that would be worth as much as 100% of executive's salary, and would only be activated if the state was able to sell more of its 71% holding. The plan had required formal approval from the Finance Minister.
"I recognise the Chairman and Board's right to put this resolution to all the shareholders of AIB, given their concerns about management retention and incentivisation in what is an increasingly competitive employment market," the Minister said.
"However I cannot vote in favour of the resolution being put forward next week," he added.
The minister said today he will make no change in policies regarding the pay of bank bosses at this stage and reiterated that all remuneration restrictions remain in place.
Under the extensive restrictions, total remuneration for staff in AIB, Bank of Ireland and PTSB is restricted to €500,000 - excluding a standard pension contribution.
The Government policy also dictates that bonuses and many other benefits cannot be paid to any staff.
Mr Donohoe also said he will abstain from voting on the remuneration resolution being put to the AGM of Bank of Ireland tomorrow.
The Minister said that remuneration policy in the Irish banking sector must be set by Government.
However, he said that in light of changes in the economy and the potential impact of Brexit on the financial sector, it is his intention to carry out a review of banking remuneration policy.
He said the Finance Department will tender for a consultant to examine whether the country's remuneration policy remains fit for purpose, identify its impacts and update me on how this policy compares in a wider European context.
These remuneration restrictions date back nearly a decade and affect in the region of 23,000 Irish bank staff.
"I acknowledge also that in light of Brexit, policy of this nature could act as a barrier to the retention of staff in some areas in what will become an increasingly competitive market due to the fact that new market entrants will not be subject to this policy consideration," he added.
