The chief executive of Royal Bank of Scotland has turned down his hotly-disputed bonus of shares worth close to £1m sterling, RBS said today, amid a row over executive pay.
Stephen Hester was due to receive a £963,000 (€1.15m) bonus this year on top of his £1.2m salary, the bank had said last week. That announcement - amid government calls for pay restraint during the continuing economic gloom - sparked outrage from trade unions and the opposition.
Among the voices criticising the award of shares on top of his salary was the Irish Bank Officials Association. The IBOA was particularly aggrieved that the bank would be handing out such lucrative incentives following RBS' decision to seek 950 redundancies at its Ulster Bank subsidiary here.
But RBS said today that Hester would not be taking the shares after all. "I can confirm that he has decided not to accept the bonus," an RBS spokesman told AFP. The fact that the sum was less than half the £2m Hester was given a year earlier had failed to dent the criticism.
British taxpayers own 82% of RBS since it was bailed out at the height of the global financial crisis in 2008. Since then, it has slashed tens of thousands of jobs.
Hester's move was welcomed by British finance minister George Osborne. "This is a sensible and welcome decision that enables Stephen Hester to focus on the very important job he has got to do, namely to get back billions of pounds of taxpayers' money that was put into RBS," the chancellor said.
The announcement came after the opposition Labour Party said it planned to force a parliamentary vote calling for Hester to be stripped of the bonus, as it sought to heap pressure on Prime Minister David Cameron's coalition government over the issue.
The government had been criticised for not stepping in, but ministers insisted it was a decision best left to Hester. Work and Pensions Secretary Iain Duncan Smith said the government could not interfere with the RBS board and so would have been forced to get rid of the body altogether to strip Hester of his bonus, a move which would have caused "chaos".
"Stephen Hester has done the right thing," said Labour leader Ed Miliband. "The debate about fair executive pay and responsible capitalism is only just beginning. We need a government that will tax bankers' bonuses and bring responsibility to the boardroom."
RBS also announced on Saturday that chairman Philip Hampton had waived a shares bonus worth £1.4m. The money was part of a 'golden hello' agreed when Hampton joined in 2009, and he was due to receive it in February.
But a source close to the matter said that in the current climate "he deemed that it wasn't appropriate". "Philip Hampton will not receive the 5.17 million shares he was awarded in 2009 when he joined RBS," the bank said.
