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Huge Bonus Payments Cause Fury

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Huge Bonus Payments Cause Fury

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Photo: Páll Stefánsson.

ALMC, an asset management company, formerly known as Straumur-Burðarás Investment Bank, has paid between 20 and 30 current and former employees bonuses, estimated to amount to ISK 3.3 billion (USD 25.5 million, EUR 23 million), DV reports.

The bonuses were paid out in mid-December. The majority of the bonus payments went to only a few people in management, who each received the equivalent of many hundreds of millions of ISK. One of them is Óttar Pálsson, a lawyer and the only Icelander on the board, but he was the CEO of Straumur Burðarás after the financial crash.

When approached by RÚV for a comment, Óttar said he didn’t wish to be quoted on the subject. Jakob Ásmundsson, one of the former key leaders of the bank, confirmed to RÚV that he, too, received a bonus, but said the amount was confidential.

MP Willum Þór Þórsson, the Progressive Party, told RÚV that the large bonuses may be the result of the company’s stability contribution to the state treasury. “As a nation and as lawmakers, we’ve shown that we’re against this bonus environment,” he asserted.

MP Bjarkey Gunnarsdóttir, the Left-Green Movement, calls the case unethical. She states that large bonuses are unjustifiable. They wouldn’t have been paid out if the stability tax had been assessed. “The fact [is] that they would have paid ISK 50 billion (USD 388 million, EUR 349 million) in stability tax, but paid instead ISK 5 billion (USD 39 million, EUR 35 million) [in stability contribution]. As Willum addressed, it shows that they’re doing this [paying themselves bonuses] on that premise, really, because they’re rewarding themselves for getting such a good deal with the state. I find that unacceptable in every way.”

Bjarkey explains that the law allows companies to pay bonuses amounting to up to 25 percent of a person’s salary. ALMC, on the other hand, does not fall under that rule. “I can never agree that billions of ISK are normal bonuses. These men earn ISK 46 million (USD 357,000, EUR 321,000) a year for being on the board. This is in addition to that … And those are only payments for being on the board. The men probably have another job as well.”

To speed up the lifting of capital controls, the government announced a plan in October to offer the failed banks the option of paying the state a stability contribution or else face a substantial stability tax. All the banks voted to pay the stability contribution, which was negotiated individually by each bank.

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