RBS chairman rejects £1.4m bonus

 

David Cameron: "It's a matter for Stephen Hester... it's obviously his decision"

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Royal Bank of Scotland chairman Sir Philip Hampton has given up a £1.4m shares reward he was due next month.

Sir Philip told the bank's remuneration committee it would not be appropriate to receive the 5.17 million shares, says the BBC's Robert Peston.

Meanwhile, the government said it would not block a £963,000 bonus, also in shares, for RBS chief Stephen Hester.

Prime Minister David Cameron said it was up to Mr Hester whether he accepted the bonus.

"That's a matter for him, that's obviously his decision."

Mr Hester's contract at RBS - which is 82% publicly owned - was agreed by the last Labour government, Mr Cameron said.

The prime minister said alternatives - such as bringing in a new team at RBS - "could be even more expensive".

"We need this team to get on with the job of turning the bank around, making it safe and securing for the British taxpayer - getting back - all the money that was put into RBS."

RBS has confirmed Sir Philip's decision not to accept his shares reward.

Analysis

The additional reward for Sir Philip was always something slightly unusual, which - as it happens - he didn't request when he took the job three years ago.

This shares incentive had already been agreed in negotiations with another candidate to chair RBS.

But sources have told the BBC his bonus was agreed three years ago when he became chairman in recognition for the scale of the task of turning around the bank.

The BBC's Robert Peston said Sir Philip made his decision before the uproar over Mr Hester's payment, which is still drawing criticism.

Labour leader Ed Miliband accused Mr Cameron and his government of being out of touch for failing to block the chief executive's share bonus.

Mr Miliband told the BBC that Mr Hester had done a "decent" job but that most people would think that his £1.2m salary was enough.

At a bank that was 83% state owned, there had to be some kind of "equality of sacrifice," he said.

In a written statement released earlier on Saturday, Mr Miliband said: "Freezing the pay of a nurse or hospital porter, while allowing a publicly-owned bank to pay million-pound bonuses, is the last nail in the coffin of this prime minister's claim that we're all in it together.

Sir Philip Hampton told the BBC's Robert Peston in January last year that some bankers are overpaid

He said his message to Mr Cameron was: "You've got another chance. At the AGM in April the government, as the majority shareholder in RBS, will have to decide how to vote on the bonus. They should vote it down."

Liberal Democrat deputy leader Simon Hughes said Sir Philip had set the right example and that "all those on the boards and in senior management at RBS and LloydsTSB should now act with equal principle and social awareness".

"In these days of austerity above all, it is unacceptable for anybody whose business has depended on public funds to take bonuses or salaries at levels which many tax payers regard as obscene" Mr Hughes said.

Professor Chris Roebuck of Cass Business School in London says there is little the government can do about pay and bonuses at RBS, because they are determined by overseas banks.

"In London there are 23 international banks, of which only three are British," he said.

Analysis

George Osborne has just told me the government will not vote against Stephen Hester's bonus as a shareholder at the April AGM.

Ed Miliband had thrown down the gauntlet on this today, but the chancellor has declined to pick it up.

"Pay levels in London are determined by those other 20 overseas banks who determine their pay on what's happening globally, and if the British banks don't play along and if RBS doesn't play along, all it means is that somebody who works for RBS has to walk 50 yards across the street to Deutsche Bank to get more money."

The pay award sparked anger across the political spectrum with one Lib Dem minister calling for Mr Hester to waive the payment and the Mayor of London, Conservative Boris Johnson, urging the government to "step in".

But No 10 has said the proper processes were followed and it was up to Mr Hester to decide whether to accept

The contract agreed in 2009 meant Mr Hester was entitled to be considered for a bonus, a spokesman said.

"That process was established by the previous government and that process is reflected in a bonus which is less than half the bonus Stephen Hester was paid last year.

"The public sector shareholder has taken a keen interest in this and has had an influence on it."

The bonus is not payable for three years, when the final amount will be determined by the firm's share price.

Several City and business analysts have said Mr Hester is entitled to receive a bonus for his performance.

 

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  • rate this
    0

    Comment number 613.

    Not very good Editors picks as usual. The 'give them the bonus they deserve it' comments are given more weight than the majority 'they shouldn't get bonuses'. Is the editor on the hotline to No.10 by any chance?

  • rate this
    -1

    Comment number 612.

    I have perhaps a better idea for him. Why not give it to charity?

  • rate this
    0

    Comment number 611.

    What does it really matter if he receives a bonus of just under a million. The government and bankers are dealing with hundreds of million £'s a day, what really is a million? There is more important problems the economy is facing, such as rising youth unemployment, a deficit of a trillion and a oil refinery on the verge of collapsing with a result of another 1000 unemployed.

  • rate this
    -2

    Comment number 610.

    I don't know anyone in my world who would turn down that amount of money, just shows how much Phil the power Hampton has in his bankers porky bank.

  • rate this
    +3

    Comment number 609.

    I can only suppose that who ever agreed the bonuses in the banking sector will also get a huge bonus which is dependant on what Heston will get. There is usually some kind of deal which as WE own the bank should and could be banned. If they want to work in the Deutsche bank then let them go. It was Labour who agreed this & remember Millband was with Blair/Brown at the time so what did Labour get?

  • rate this
    +2

    Comment number 608.

    Get something proper to worry about. Stop following Peston - he needs to to keep it live as he has nothing else - one trick pony.

    As a genuine investor in RBS (real shareholder) I want the best people possible in charge of the Bank to ensure I get the best possible return. Why don't you understand this?

    Too much time raking in benefits and reading the Sun / Mail probably. GET A LIFE!

  • rate this
    0

    Comment number 607.

    599.wittonend

    Yes I've heard of this "neo-fuedalism" (I just made that up... I think so don't bother checking Wikipeida for it) which tries to transpose the feudalistic system on to ours.

  • rate this
    -1

    Comment number 606.

    So it is quite clear the banks caused the problem and now that we own the worst of them, our Government would prefer not to upset them too much, after all what is a couple of million pounds in the long run, when we can get it back by screwing anyone earning less than £35K?

  • rate this
    -3

    Comment number 605.

    How many jobs do nurses, police officers , teachers, doctors create ??
    Wake up , we need job creaters to create wealth to pay for these people

  • rate this
    -1

    Comment number 604.

    as far as im concerned they can choke on their money..it wont make them any happier.....if heston and the rest of them are doing such a fine job how come rbs savings rate are so rubbish.....

  • rate this
    0

    Comment number 603.

    537 ludwig

    'sfunny. I thought wealth was created by some people having a good idea of what people want, investing in their beliefs (sometimes loosing everything - but no one cares about that), spending all their time and effort getting the product to the market. Yes it may have been produced by workers but they are 10 a penny compared to those prepared to take the risk. Then they pay a lot of tax

  • rate this
    +3

    Comment number 602.

    594. I-330
    ===

    I know a cleaner with a double starred first in quantum physics, he could certainly do the job. However, he's just not sufficiently cruel to arrange for thousands to be consigned to unemployment. In other words; we make choices in life on whether or not to become successful at the expense of our fellows. Many of us just don't have the requisite killer instinct, thankfully

  • rate this
    +2

    Comment number 601.

    A deferred equity bonus does not draw funds from the business or go to bottom line; it doesn't prejudice taxpayer capital. With a 3 yr vesting schedule and exercise price presumably based on current share price, it only aligns Hester's incentives with taxpayer's interests; to improve the RBS business and increase share price. In taxpayer interests that RBS execs are world class and we retain them.

  • rate this
    +1

    Comment number 600.

    I am stunned. It is standard and good governance that a chairman and all non exec directors NEVER get bonuses, but only fees, to kep them "clean".
    Sir Philip should know this. As should any remuneration adviser.
    Given this is govt owned to 85% there should be an enquiry as to what has gone on here. This is outrageous and extremely bad governance.

  • rate this
    +1

    Comment number 599.

    566 576

    The agricultural feudal model has been replaced by a modern financial feudalism. Todays model extracts as much monthly income from middle income earners in tax, utilities, fuel, etc and returns it via excessive profits to pay dividends to shareholders, and salary/bonus to directors

  • rate this
    0

    Comment number 598.

    Big chiefs and bosses of the banks are earning so much as it is! What difference are they making apart from being rich and what about nurses, doctors and police officers. They don't even earn a fraction of this. The government should not support this in fact a bank like RBS which is mostly earned by the public, the wages should be reduced greatly such as £300 k a year for Stephen Hester.

  • rate this
    -1

    Comment number 597.

    # 586
    Trouble is that the clever chappies like those at Barclays start using underhand methods to disguise their bonuses by incorporating them into salary - that way they can still give themselves an overall (pay and bonus) increase of 20% YvY without courting controversy....Big Bob's not stupid, that's why he's worth a ten figure salary 10,000,000 or 384 ordinary mortals.

  • rate this
    +1

    Comment number 596.

    576.I-330 yip and social relations characterised by rigid status based hierarchies built around power and the role of homage and widespread hegemonic practices of people 'knowing-their-place'. get it? No? Don't mater.
    And i managed all that without the aid of on online dictionary....

  • rate this
    0

    Comment number 595.

    I am impressed that Sir Philip Hampton has voluntarily forgone his £1.4m bonus payment, but could I ask why was he entitled to this? Surely if his CEO was taking all of the credit for turning around the failing bank and worth £0.93m then how is he worth £1.4m. Surely at this rate of payment we don't need two of them to make the decision or is it just another financial scam?

  • rate this
    +3

    Comment number 594.

    588.firemensaction

    "From the looks of a lot of posts, there seem to be some who think that even a toilet cleaner could run a bank."

    Really!? Who said that? I know people have said they could probably do a better job but I don't think anyone claimed the a toilet cleaner could run a bank, not that they couldn't under the right circumstances. Don't judge peoples ability by their employment.

 

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