ROYAL Bank of Scotland boss Stephen Hester will top up his £1.2m salary with up to £4.8m a year in shares, the bank’s annual report revealed yesterday.
The new long-term deal with the man who slashed the bank’s annual losses from a record £24bn in 2008 to just £3.6bn last year is worth four times his base-pay. It is reliant on meeting targets over a three-year period and replaces a scheme worth 4.5 times his annual salary.
Shareholders are yet to vote on the scheme but it is considered a formality after it was approved by UK Financial Investments (UKFI), which controls the taxpayer’s 84 per cent stake in the bank.
The bonus will be paid out in three increments. Half will be linked to profits the bank achieves in 2012. A further quarter will be linked to total shareholder return compared to other leading UK banks, with the top rate kicking in if RBS finishes in the top quartile. The final quarter will reflect the bank’s share price. He will hit the full amount if he achieves the ambitious goal of boosting the bank’s share price from its current 43p to 75p.
RBS say the scheme is far tougher than the one in place under former boss Fred Goodwin, and factors in a series of “clawback” measures. Hester waived his £1.6m bonus last month, saying it would deflect attention from the outstanding progress the bank has made since he took the helm.
The annual report also revealed outgoing deputy chief executive Gordon Pell, the last remaining director from the Goodwin era, has accrued a £582,000 a year pension pot.