Hester's £35.5m pay deal fuels renewed anger over excess
PM and Chancellor pressed to make urgent Commons statement as fairness issue reignites
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Stephen Hester, the chief executive of Royal Bank of Scotland, is in line for an extra payout of £3.3m which would dwarf his controversial bonus of £963,000, it emerged last night.
Disclosure of the staggering figure amounts to political dynamite as the Prime Minister fought off suggestions that he should veto the near-£1m bonus, announced last week, for the boss of the taxpayer-owned RBS.
The extra bonus of £3.3m, revealed yesterday, would be on top of the £35.54m total remuneration package Mr Hester has received since joining RBS in 2008.
As the political storm surrounding executive pay at RBS grew, Ed Miliband called on David Cameron to intervene and urged RBS shareholders to block the £963,000 bonus at its AGM in April.
The Labour leader will call for Mr Cameron or George Osborne, the Chancellor, to make an urgent statement to the Commons tomorrow on the affair at a time when the Government is capping benefits for the poorest in society. It will cast doubt on the vow by the Business Secretary, Vince Cable, to tackle executive pay.
In a further ratcheting-up of pressure on Mr Hester, it also emerged that the RBS chairman, Sir Philip Hampton, has decided to waive his £1.4m shares bonus.
But the Prime Minister, who earlier this year made great play of calling for Sir Fred Goodwin to be stripped of his knighthood for presiding over failure at RBS, yesterday refused to bow to political pressure.
Apparently uncomfortable at being asked by journalists about the bonus following talks with the Afghan President, Hamid Karzai, at Chequers yesterday, Mr Cameron insisted that Mr Hester's bonus was "a matter for him" and that installing a new top team at the failed bank, which is 82 per cent owned by the taxpayer, would be even "more expensive" than it is now.
The PM said: "It's obviously his decision. My decision is to make sure the team at RBS get on with the job of turning the bank round and we made our views very clear on the bonus and that's why it was cut in half compared to last year.
"The fact is Stephen Hester was brought in by the last government, a contract signed by the last government to turn round RBS – a bank that had got itself into a complete mess. The Government has made its views known and that is why his bonus was cut in half compared to last year. We do have to bear in mind that the alternatives to what's happening now could be even more expensive if you had a whole new team coming into RBS."
The RBS remuneration committee awarded the £963,000 – 60 per cent of what Mr Hester is entitled to – in an apparent attempt to avoid the politically toxic threshold of £1m.
Yet the new figures revealed last night dwarf the controversial bonus and will escalate pressure on the Government to block it.
Mr Hester's portion from the "share bank" set up for bonus payments would be worth some £3.3m at present prices, based on 12 million shares – although he would not be able to cash them in for three years.
The £3.3m is on top of Mr Hester's total package of £35.54m since joining the bank in 2008. That year, when the then Labour government bailed out RBS, Mr Hester was awarded £4.99m in restricted shares, forgoing pay and bonuses. In 2009, his package was worth £6.9m. In 2010, his total package rose to £8.16m. Last year, the total was £8.08m, including a long-term incentive plan (LTIP) worth £4.8m, bonus £1.66m and salary and pension contributions. For 2012, the total figure is £7.38m – including LTIP worth £4.8m, his bonus of £963,000 and £420,000 pension contributions and £1.2m salary..
Mr Hester, who presided over losses of £3.6bn in 2009 and £1.13bn in 2010, has so far remained silent. Ministers insist they cannot prevent the payout as it was enshrined in the contract agreed by the Labour government after Mr Hester took over RBS in 2008.
However, despite the continuing economic problems, Mr Hester's generous remuneration package is not unusual and several more senior RBS executives will still be in line for multi-million pound awards. A plan to monitor top pay is being launched today by a new independent body, the High Pay Centre. Its director, Deborah Hargreaves, said: "The concept of any bonus in these circumstances is insensitive. But if Hester knew that £3m of shares were about to be vested for him, their insensitivity in awarding this bonus is even greater."
The Shadow Business Secretary, Chuka Umunna, said: "The public will find these sums to be completely unacceptable at a time when public sector workers are having pay freezes imposed on them."
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments