Royal Bank of Scotland boss Stephen Hester has come under political pressure to refuse a bonus worth nearly £1m.
The senior City figure’s bonus has been branded “out of touch” by Labour, while a government minister said Hester has a public “duty” to turn it down.
Hester’s payout was cut to about 60 per cent of the maximum because of the intense political pressure around awarding bonuses to the bosses of taxpayer-funded banks.
The RBS chief executive, who earns a salary of £1.2m, is in line to receive 3.6 million shares worth £963,000 in the bank, which is 83 per cent owned by the state.
Prime minister David Cameron had made it clear he wanted this year’s bonus to be “a lot less” than in 2011 and the package is less than half the value of last year’s all-shares bonus. Treasury sources said they were pleased with the reduction.
But Labour said the size of the payout showed the government was not serious about reducing executive pay and perks and that it was “desperately out of touch” with the electorate.
Liberal Democrat Jeremy Browne called on Hester to think of the taxpayer and refuse the shares. Speaking on BBC One’s Question Time, Browne pointed out that Hester earned in three days what a soldier in Afghanistan would pick up in a year.
Sir Philip Hampton, the chairman of RBS Group, acknowledged that the bank had “difficulties in trying to reconcile the competing objectives of all our stakeholders”, particularly on pay.
However, Sir Philip said Hester “played no part” in the bank’s collapse and the bonus reflected that the turnaround was “progressing well” under his stewardship.
Pay at RBS has come under intense public scrutiny since it was received a £45bn state bailout. Its remuneration committee was said to have been weighing up a bonus of up to £1.5m until Cameron called for a lower figure.
Speaking on BBC Radio 4’s Today programme, shadow business secretary Chuka Umunna said he would not have paid Hester “any bonus in these circumstances”.
Umunna said: “The government is the main shareholder here. Ministers have said that shareholders should play a more active role in reining in excess where they see it,” he said.
“This is in the main a publicly owned institution, and the prime minister has failed to do so. People listening to this programme will be flabbergasted that nothing has been done about this.”