RBS boss urged to waive his bonus

Jan 29 2012

The chief executive of the taxpayer-funded Royal Bank of Scotland (RBS) is facing mounting pressure to follow the bank's chairman and waive his bonus of almost £1 million.

News of a double bonus scheme that could greatly inflate Stephen Hester's £1.2 million annual salary to a possible £8 million over the coming years has fuelled calls for him to forgo a shares bonus worth £963,000.

A stark contrast came to light on Saturday when it was announced the bank's chairman Sir Philip Hampton had decided to decline a £1.4 million payout.

Sir Philip, chairman of RBS since 2009, had been on course to claim 5.17 million shares in the financial institution in February, but it is thought he told the bank's remuneration committee it would "not be appropriate" for him to take the shares to which he is entitled.

He was given the scheme when he was appointed at the 83% state-owned bank as part of a three-year long-term incentive deal.

An RBS spokesman said: "Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009 when he joined RBS."

Mr Hester is entitled to both short-term bonuses and long-term incentive bonuses based on factors such as performance and meeting targets. The £963,000 he was awarded last week was a short-term bonus equalling 3.6 million shares, relating to the 2011 calendar year.

Short term bonuses are capped at 200% of his annual salary, so his last payout was not as large as it could have potentially been. The long term scheme is based on the previous three years, so Mr Hester is approaching the point at which it can come into effect.

It is thought the long term bonus could potentially reach £8 million, but it is unlikely that maximum target will be met.

On Saturday, Prime Minister David Cameron sidestepped calls to personally block Mr Hester's award, saying: "It is a matter for him." Speaking at Chequers, Mr Cameron told journalists: "It's obviously his decision. My decision is to make sure the team at RBS get on with the job of turning the bank round and we made our views very clear on the bonus and that's why it was cut in half compared to last year."