RBS Chief’s Pay Package Rises to £7.8 Million
Royal Bank of Scotland has awarded chief executive Stephen Hester £4.45 million of shares in a new long-term incentive package, bringing his total pay for 2010 at the state-backed bank to a maximum of £7.75 million.
In two stock exchange filings late on Tuesday, RBS revealed it had paid out £28 million of share bonuses and long-term incentive awards to Mr Hester and eight other senior executives. RBS is 84 percent owned by the UK taxpayer.
The announcements came just a day after rival Barclays disclosed that Bob Diamond, its chief executive, and two of its top investment bankers earned almost £40 million between them in pay, bonuses and long-term incentive awards for 2010, as well as another £77 million for prior years’ performance.
RBS had already revealed that Mr Hester would receive a £2 million all-share bonus on top of his £1.2 million salary for his performance in 2010. His new long-term incentive or LTIP award, which is comprised of more than 10 million RBS shares, is subject to RBS meeting future performance conditions and will vest only after three years.
He would also be eligible for 6 million additional RBS shares in 2012 as part of a new “share bank” bonus scheme, worth about £2.7 million at current prices, the bank said.
Mr Hester’s total pay package of £7.75 million is slightly lower than the £9 million in salary, bonus and long-term incentives awarded to Mr Diamond this week, although elements of Mr Diamond’s pay could still rise significantly if Barclays hits certain targets. Stuart Gulliver, chief executive of HSBC , was awarded an all-share bonus of £5.2 million on top of his £970,000 salary for 2010.
RBS is not expected to release the full detail on its senior executives’ pay until next week, when it publishes its remuneration report. While the total share-based bonuses received by nine of its top executives were revealed in Tuesday’s flings, most of those executives will also receive additional payments in bonds, according to bank sources.
Mr Hester and chief financial officer Bruce Van Saun, who received more than £4 million worth of share bonuses and long-term incentive awards, are not eligible for those payments.
It is not expected that any of the bank’s senior officers will have earned more than Mr Hester in 2010, although RBS, like other banks, is not required to disclose the pay of top traders and bankers who do not hold executive responsibilities.
John Hourican, the head of RBS’s investment banking division, was awarded a share bonus of £2.5 million for 2010, at the lower end of the range for the industry.