RBS likely to cap Stephen Hester's bonus at £1 million
Wednesday, 25 January 2012 09:09
The Treasury is under increasing pressure to limit the amount paid in a bonus to the chief executive of the Royal Bank of Scotland (RBS), Stephen Hester.
It is likely that his bonus will be limited to £1million, half the amount he was paid last year. Public anger at banker bonuses shows no sign of abating as the economic depression shows no sign of lifting and UK households are in the middle of the biggest squeeze in living standards since the Second World War.
Even though improving the performance and share price of RBS is in the public interest and many would argue that whoever manages that deserves a big bonus the Treasury is likely to advise that Mr Hester’s bonus is limited despite him meeting performance targets.
However, RBS shares are still languishing at 26 pence despite a rise from around 20 pence per share in the last three weeks. The share price needs to reach 51 pence before the taxpayer and government would be in a position to recoup their investment.
The RBS had to be bailed-out with £45 billion of tax-payers money and is now 83 per cent owned by the UK taxpayer.
On Monday, the Business Secretary, Vince Cable announced measures to curb executive pay by offering shareholders new powers to veto high pay deals for top executives and for pay details to be published in a transparent way.
However, despite this the Prime Minister, David Cameron has refused to confirm that Mr Hester’s pay and bonus will be limited. It is expected that the payout Mr Hester receives would be deferred by three years and would be in shares not cash.
At the weekend Myfinances.co.uk reported that RBS staff are expected to share a £2.5 billion bonus pot which includes an estimated £500,000 in bonuses.
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