Royal Bank of Scotland, the partly nationalised British lender, is to unveil a pay package for its chief executive Stephen Hester worth up to £9.6m sterling after securing backing from investors, the Financial Times said today.
The paper said negotiations over Hester's pay deal concluded on Friday after RBS chairman Philip Hampton won the approval of shareholders including UK Financial Investments, the body which manages the government's 70% RBS stake.
RBS has been at the centre of investor and public anger over excessive pay in the banking sector, stoked by the taxpayer-funded bailout of lenders across the US and Europe.
Hester would receive a £1.2m salary, a projected £2m in annual non-cash bonus payments, and nearly £6.4m in long-term share options, according to the FT.
Hester's package is dependent on targets including total shareholder return and absolute share price performance, and the maximum share grant would only be awarded if RBS shares passed 70 pence, the paper said.
Hester's reported package compares with basic pay of £1m sterling plus a share award of up to 200% of salary handed to Eric Daniels, the new CEO of Lloyds Banking Group which is 43.4% owned by the British government.
Hester was appointed last year to restructure RBS after heavy exposure to risky credit-backed assets built up during the tenure of his predecessor, Fred Goodwin, forced the bank to accept £20 billion of emergency government assistance.
In April, shareholders rejected RBS' directors' remuneration report by a majority of over 90%, in a move seen as a protest against a £703,000 a year pension awarded to Goodwin. Last week the bank said Goodwin had agreed to reduce his annual pension income to £342,500.
