L Bank of Scotland’s chief executive yesterday admitted his parents think he is paid too much even as he staged a staunch defence of the bank’s right to hand out bonuses.
Stephen Hester, who stands to make £10m if he can turn around the beleaguered lender, signalled he understood public anger over bumper payouts following the financial crisis.
In a combative encounter with the Treasury Select Committee, Hester said: “If you ask my mother and father about my pay they’d say it was too high… so some people close to me have that view of bankers.”
Hester’s mother is a psychotherapist while her husband is a part-time chemistry professor at the University of York. A senior-level psychotherapist with the NHS can earn up to £78,000. Natural science lectureships at York typically pay around £43,000 pro rata.
In contrast Hester, hired by Alistair Darling in October 2008 to rebuild a tattered RBS, has an incentive deal that will pay out £9.6m in 2014 if the bank’s shares hit 70p. They are currently languishing at around 35p.
Hester said the 84 per cent state-owned group aimed to pay the “minimum we can get away with” in 2009 bonuses but said institutional shareholders were increasingly concerned at the bank’s inability to recruit and retain talent. He warned RBS would “become a part-prisoner of the marketplace” if political expediency took precedence over commercial strategy. Hester also revealed a handful of its 22,000 investment bankers will receive bonuses in cash, not shares, due to previous commitments.
In the same sitting, Lloyds Group CEO Eric Daniels said he was “very sorry” to small investors who suffered after the disastrous takeover of HBOS. However, he insisted: “I don’t believe that anyone was hoodwinked.”