Royal Bank of Scotland Chief Executive Stephen Hester could get up to £4.5 million in shares, a sum Faisal Islam is going to be very awkward for the Government to justify.
The award is in addition to the £2m bonus in deferred shares announced by RBS last month as well as Hester’s base salary of £1.2m. The LTIP is dependent on performance but could reignite controversy over banker pay.
RBS is under intense scrutiny on how much it pays executives and staff after it was bailed out by the UK taxpayer and is 83 percent owned by the government. The bank said Hester’s remuneration was justified.
“These awards follow exhaustive consultation with our shareholders and we believe they appropriately balance demonstrating restraint while remaining fully supportive of our leadership through the RBS turnaround plan,” a spokeswoman for the bank said.
Channel 4 News Economics Editor, Faisal Islam, said: “On the very brutal measure of profit, RBS announced losses of £1.13bn for 2010…that’s £174m loss for every £1m of his bonus. This is a very large number. Let me give you a comparison; UBS of Switzerland. The boss their waived his bonus and they made a profit of £4.5bn. The messgae from RBS is that they have to pay this amount because they’re in a competitive market, but that will come as no comfort to the people who are getting pay feezes and cuts.”
The award comes a day after UK rival Barclays said its Chief Executive Bob Diamond and two key lieutenants were paid £28m last year and received shares worth over £75m for past performance.
Diamond could get as much as £13.5m under his 2010 awards. He was paid a bonus of £6.5m, a base salary of £250,000, and could get 6.75 million pounds worth of shares if his own LTIP pays out in full.