Belfast Telegraph

RBS shareholders urged to oppose re-election of chairman Sir Howard Davies

Shareholders in Royal Bank of Scotland are being urged to vote against the re-election of chairman Sir Howard Davies over the lack of female representation on the board, with the lender's executive pay also under fire from investor groups.

Pensions & Investment Research Consultants (PIRC) said shareholders should oppose the reappointment of Sir Howard at the bank's upcoming annual general meeting (AGM) after failing to draw up targets for boosting the number of women executives.

In a report, the group said: "(Sir Howard) is the chairman of the nomination committee and no target has been set to increase the level of female representation on the board, which is currently insufficient at 23%.

"This ratio decreased below 25% following the appointment of Mark Seligman in April 2017.

"While the company acknowledges the updated targets published in the Hampton Alexander Report, there is no clear commitment to increase overall gender diversity at board level."

The state-owned bank is also bracing for a shareholder backlash over a new remuneration policy, which will face a binding investor vote at its AGM in Edinburgh on May 11.

Chief executive Ross McEwan would be eligible for a long-term award of 175% of his salary and finance chief Ewan Stevenson 200%.

Although the awards are a decrease on the previous 400%, investor advisory group Institutional Shareholder Services (ISS) said this was not "sufficient", and recommended investors oppose the remuneration policy.

In addition, ISS expressed concern over proposals that would see executives remain in line for pay awards even after they leave the bank.

PIRC is also calling on shareholders to vote against the new pay scheme, stating: "The proposed disapplication of time pro-rating under the new policy is a major concern and cannot be supported.

"The executives should be rewarded for the period they served the company and nothing more."

Last week RBS reported its first quarterly profit since 2015, with Mr McEwan hailing the results as a "major milestone".

However, Chancellor Philip Hammond has also recently made the stark admission that the Government is prepared to sell its 72% stake in the lender at a loss to the public purse.

The Government bought its holding in the bank for £45 billion in 2008, at £5.02 a share, as part of a bailout at the height of the financial crisis.

But shares are now trading at just over half that price.

The bank said in a statement: "The aim of the new construct is to encourage sustainable long-term performance, with executive directors having significant alignment in shares both during and after employment.

"The shareholding requirements will rise significantly and, in line with the growing consensus on the need to restrain executive pay, the maximum long-term incentive award level will be reduced by up to 40%. The removal of time pro-rating enables the expected value of pay to be broadly maintained over their typical tenure.

"Aspects of our new policy are anticipating trends that are still in development, and some market participants, in particular ISS, are generally not supportive of moves away from conventional remuneration structures.

"RBS has, since the financial crisis, been a market leader in showing restraint in executive pay and in seeking to move away from highly geared financial incentives.

"It is right that RBS remains at the forefront of pay reform, even if this means challenging conventional thinking."