Stephen Hester, chief executive of the Royal Bank of Scotland (RBS), has bowed to pressure to waive his controversial bonus worth almost £1 million.
The bank’s board decided to allocate Hester a 2011 annual performance award of 3.6 million shares worth £963,000 at the closing price (26.75p) on January 25. The award is made up of deferred shares,subject to holding conditions, the full value of which cannot be received until late 2014.
This award was due to be paid on top of Hester’s £1.2 million salary and long-term incentive plan which could be worth as much as £4.5 million.
Sir Philip Hampton, group chairman of RBS, said: “The board is aware of the difficulties in trying to reconcile the competing objectives of all our stakeholders. This is especially true on the issue of pay. Hester’s pay award reflects progress in the categories agreed with our shareholders as set out in the remuneration report.
“His pay is strongly geared to the recovery of RBS, which he was recruited to turn around, having played no part in its collapse. The priority is to re-shape a business that was far too big and far too risky, reducing legacy losses while improving performance in the group’s strong core businesses.”
For more articles on executive pay