Royal Bank of Scotland boss Stephen Hester has decided to waive his bonus of nearly £1m after intense media and political pressure.
The banking chief has opted to forgo the 3.6 million shares package worth £963,000 that he was awarded last week, the bank confirmed.
Hester’s bonus had become a headache for the government, with Labour claiming prime minister David Cameron had failed to clamp down on executive pay, while mayor of London Boris Johnson said it was “absolutely bewildering” a taxpayer-backed bank should pay out such a large bonus.
George Osborne, the chancellor, said: “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.”
Hester’s decision to forgo his bonus was announced hours after it emerged Labour had planned to force a Commons vote calling for the chief executive to be stripped of his bonus. Labour said Cameron’s “failure of leadership” could not be allowed to stand.
Labour leader Ed Miliband said Hester “has done the right thing”. He continued: “It is a shame that a feeble, out of touch David Cameron did not realise he should do the right thing and stand up for the interests of the British people.
“Labour was right to seek a parliamentary vote on this so that the people’s voice could be heard. But 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 chairman Sir Philip Hampton announced on Saturday that he would not be picking up his own bonus, heaping further pressure on Hester to do the same.
Sir Philip was set to receive bonus worth about £1.4m in February, but he informed the bank’s remuneration committee it would “not be appropriate” for him to claim 5.17 million shares in RBS.
Further controversy could be on the horizon though, because Hester is expected to be entitled to another shares bonus which could reach up to £6.4m on a long term incentive scheme which is nearing the point it can become effective.
Financial Services Authority chairman Lord Turner, who claimed excessive bonuses are “not good for society”, is due to appear in front of the Commons Treasury Committee on RBS.