ROYAL Bank of Scotland (RBS) last night bowed to government pressure and cut chief executive Stephen Hester’s bonus to £963,000.
The award was made in the form of 3.6m shares which, based on Wednesday’s closing price of 26.75p, comes in just under the symbolically important £1m level.
Some politicians had called for the part-nationalised firm to axe Hester’s bonus altogether but instead the board gave him 60 per cent of his maximum award in the form of stock that can only be sold in late 2014.
Hester (below) will still collect a salary of £1.2m for 2011 but failure to meet share price targets means that he is unlikely to benefit from the bank’s long term incentive plan – essentially missing out completely on a £6.4m bonus he was promised when he joined the company in 2008.
RBS is 83 per cent owned by the government following a bailout during the financial crisis and Hester’s pay has become a political issue, especially since the firm has cut 30,000 jobs under his watch.
Commenting on the decision RBS group chairman, Sir Philip Hampton, said: “Stephen Hester’s pay award reflects progress in the categories agreed with our shareholders as set out in the Remuneration Report. His pay is strongly geared to the recovery of RBS.”
Antonio Horta-Osorio, chief executive of the similarly part-nationalised Lloyds, agreed to waive his bonus after spending part of the year off work on sick leave.