Banking chiefs at HBOS and Royal Bank of Scotland (RBS) have paid the price of the clampdown on excessive bonuses by waiving their entitlement to severance packages.
The four head bankers waived payouts worth a total of more than £3.5m as they left the banks amid the government bailout. Announcing the £37bn bailout deal, Prime Minister Gordon Brown said he wanted to bring an end to “rewards for failure” and attacked the culture of excessive bonuses.
This comes as the Financial Services Authority addressed an open letter to 28 banks criticising the role of excessive bonuses in contributing to the economic downturn.
RBS’s chairman Sir Tom McKillop, who last year earned £750,000 will stand down in April 2009, waiving his entitlement to £750,000. His colleague Sir Fred Goodwin, RBS’s chief executive will leave immediately, without claiming a £1.2m severance deal. He earned £1.2m in salary last year, plus £2.9m in bonuses.
At HBOS, which is currently negotiating a rescue deal with Lloyds TSB, the chief executive Andy Hornby and chairman Lord Stevenson of Coddenham, will also leave once the deal is complete, thought to be early next year.Mr Hornby, who claimed £940,000 in salary and £449,000 in bonuses is forfeiting his £940,000 payoff. Lord Stevenson will waive £708,000 after earning £708,000 last year in basic salary.
Senior executives at RBS, HBOS and Lloyds TSB are also set to miss out on almost £20m in bonuses.