RBS chief’s £7.7m pay package deal rubber-stamped

UK Financial Investments (UKFI), which manages the taxpayer’s 83 per cent stake in RBS, gave its support despite a widespread backlash over the deal.

Shareholders were asked to vote on the part-nationalised bank’s pay plans at the group’s annual meeting in Edinburgh.

The board was grilled by angry shareholders at the AGM, who fired questions and criticism over bonuses and the lack of dividends.

The bank has been embroiled in controversy since it emerged last month that Mr Hester was awarded an additional £4.5m potential shares windfall on top of his £2m annual bonus and £1.2m salary for 2010, which was not originally revealed under the Project Merlin agreement with the Government to rein in pay.

RBS also admitted it paid 323 code staff – those deemed to be in risk-sensitive roles – £375m last year despite remaining in the red by £1.1 billion in 2010.

RBS chairman Sir Philip Hampton told the AGM it had tried to strike a balance between paying to motivate people and showing restraint.

“We need talented and motivated people and we need to be able to pay them fairly,” he said.

“We have to motivate all staff and only a tiny minority were responsible for the problems RBS encountered, all of whom have now left.”

After voting in favour of the remuneration report, UKFI released a statement, which said: “UKFI sees reforms to remuneration practices as vital to RBS’ continued recovery and to UKFI’s objective of protecting and creating value for the taxpayer as shareholder in the bank.

“RBS has continued to make reforms to its remuneration practices, including through the introduction of a deferred share-based annual bonus for its executive directors and stringent deferral and clawback conditions.”