Insurance company RSA was forced to backtrack on plans not to pay staff a bonus after an internal outcry.
Trade magazine Insurance Post reports that UK and international chief executive Steve Lewis emailed UK staff in February saying the company “cannot justify” paying performance-based bonuses in the light of its financial performance.
This caused an outcry among staff who were angry that chief executive Stephen Hester received a bonus of £1m.
In response to anger from staff, RSA backtracked, agreeing to pay discretionary bonuses of between £600-£800.
Hester received a nearly £5m pay packet from RSA last year which, despite poor UK performance, achieved strong financial results overall.
On top of his salary of £987,000, the former Royal Bank of Scotland (RBS) boss received a £1m bonus, £2.6m as part of a long-term incentive plan and nearly £300,000 in pensions related benefits.
His bonus did fall from £1.5m to £1m, but his overall package grew 11 per cent from £4.5m last year.
It is not the first time Hester has been involved in bonus-related controversy.
In 2010 when he was at RBS he waived a £1.6m bonus amid political pressure and a wave of public anger at pay in the banking sector following the financial crisis.
A spokesperson for RSA said: “Last year was an exceptionally challenging year for the insurance industry. RSA’s UK business bore the brunt of large weather-related losses, which impacted the performance bonuses in the UK.
"We have an open and transparent culture that encourages feedback, so when the UK management and staff expressed concern, we listened and paid a discretionary payment to our front line colleagues in recognition of their hard work and energy throughout the year.”