RBS scheme could pay £5m in executive bonuses each year
Royal bank of Scotland yesterday announced a new executive remuneration policy that could see chief executive Stephen Hester earn nearly £5m in bonuses each year.
The 84% taxpayer-owned bank outlined the new plan in its annual report, published yesterday. The plan will be put to shareholders at the bank's annual general meeting on April 28, although it will almost certainly be approved. RBS has already held talks on the scheme with UK Financial Investments (UKFI), the company set up by the Government to manage the state's stake in the bank. UKFI yesterday declined to comment on the announcement.
Under the scheme, Mr Hester could earn as much as £4.8m in share options. The structure will apply to all executives, who will be judged on what the bank described as “substantially toughened” criteria. Half of payouts will be based on RBS's economic profit, with the rest judged on shareholder returns. The bonus will be subject to clawback provisions, allowing the bank to reclaim payments if its performance deteriorates.
RBS's chairman, Sir Philip Hampton, said the scheme would reward staff, “fairly, appropriately and at market levels”.