A controversial bonus for the boss of taxpayer-funded Royal Bank of Scotland will be capped at less than £1m, it was reported.
RBS chief executive Stephen Hester is in line for around three million shares, about half his entitlement, which equates to between £800,000 and £950,000 at Wednesday’s closing share price, Sky News said. Mr Hester, who is on a salary of £1.2m, last year received an all-shares bonus worth £2m.
The board of RBS, which is 83 per cent state-owned, is understood to have agreed the payout, which will be paid entirely in RBS stock and deferred for three years, at a meeting on Wednesday.
Prime Minister David Cameron has made it clear that he would regard a bonus of more than £1m for Mr Hester as unacceptable.
RBS declined to comment on the report.
The decision, which could be confirmed as early as today, came after Business Secretary Vince Cable revealed proposals to crack down on hefty salaries and bonuses, including binding votes for shareholders and improved transparency.
However, RBS’s concession on Mr Hester’s bonus will not defuse the row over directors’ pay completely, as John Hourican, head of RBS’s investment arm, who will oversee a restructuring that will include around 3,500 job losses, picks up £4m in long-term incentive shares that he was awarded in 2009.
RBS is believed to be talking to UK Financial Investments (UKFI), the body which manages the taxpayer’s stakes in Britain’s bailed-out banks, about its plans.
The payment protection insurance (PPI) mis-selling scandal, for which RBS set aside compensation of nearly £1bn, is understood to be among the factors taken into account by RBS’s remuneration committee when deciding Mt Hester’s bonus.