THE governing body responsible for overseeing the taxpayer’s stake in Royal Bank of Scotland has voted overwhelmingly in favour of the banks’s new remuneration structure.
The bank agreed to toughen up its bonus criteria after it came in for fierce criticism for setting the bar too low for lucrative performance-related incentive packages to come into play.
It put initial proposals to investors at its annual meeting in Edinburgh yesterday. More than 99 per cent of the vote went in its favour.
UK Financial Investments (UKFI) said it was satisfied the new structure for bonus packages struck the right balance between keeping the bank competitive and giving good value to the public.
A spokesman said: “UKFI considers that the new RBS long-term incentive plan will align the interests of management with those of shareholders including the taxpayer by encouraging the creation of long-term, sustainable value in the business without incentivising excessively risky behaviour.
“RBS has made very significant reforms to remuneration practices at the bank over the last year. These changes have included the introduction of stringent deferral and clawback terms for bonuses, a more robust approach to taking proper account of risk in the design of pay systems and in making individual awards, and mechanisms for ensuring that all variable remuneration is subject to challenging and measurable performance criteria.”
Details of the new remuneration scheme are expected on 7 May.
Meanwhile, RBS chairman Philip Hampton said RBS is making “good progress” but still has a long way to go before it can leave behind its image as a “problem bank”.
He said he can not give any guarantees about when the bank will return to profit. He said: “We are under no illusions that we are out of the woods”.