RBS Chief has award reduced

Exclusive: RBS Proposes Hester Bonus Compromise

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Mark Kleinman

January 26, 2012 12:44 PM

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Stephen Hester, the chief executive of Royal Bank of Scotland
(RBS), is poised to be awarded an annual bonus of less than £1m, a
decision that the bank and ministers hope will defuse the intensifying
row over his pay.
I have learned that RBS’s directors agreed the
payout at a board meeting yesterday. The bonus for Hester of
approximately 3m shares (about half his entitlement) will equate to
between £800,000 and £950,000 at yesterday’s closing share price. It
will be paid entirely in RBS stock and will be deferred for three years.
If
confirmed, the news will please David Cameron. The prime minister has
made it clear in private that he would regard a bonus of more than £1m
as unacceptable. Last year Hester was awarded an all-share bonus worth
just over £2m.
RBS, which is 82 per cent-owned by the taxpayer, is
hoping to announce details of Hester’s remuneration as early as
tomorrow. I’m told that Downing Street has urged RBS to disclose the
details as soon as possible in an attempt to end escalating tensions
over the issue. That timetable could, nevertheless be delayed or even
brought forward to today, depending upon how the talks progress.
I
understand that RBS is holding discussions today with UK Financial
Investments (UKFI), the Treasury body which manages the taxpayer’s
stakes in Britain’s rescued banks, about its plans. UKFI is likely to
issue a statement backing the award when it is announced by RBS although
it is possible that the final amount could change as a result of
today’s discussions, I’m told.
Last week, RBS and Mr Cameron
denied a newspaper report that the bank’s board was proposing to award
Mr Hester a bonus of up to £1.6m.
I’m told that in addition to
Hester’s annual bonus, RBS will disclose the details of his annual award
under the bank’s long-term incentive plan. This, City sources
speculated, could be worth a further £1m-£2m, which would take his total
pay package for the year – including his salary of £1.2m – to between
£3m and £4m. (I should point out that that last figure is based on
conjecture.)

AT LAST SOME COMMONSENSE ON BANK BONUSES.

6:52pm UK, Saturday January 28, 2012



Tadhg Enright, business correspondent






RBS chief executive Stephen Hester is likely to be offered a
potential bonus of 12 million shares for 2012, according to Sky News
sources.


Mr Hester is already under intense pressure to refuse a bonus of just under £1m he has been awarded for his work in 2011.


But now Sky's city editor Mark Kleinman has discovered the bank's remuneration committee has been discussing his reward for his work this year.


It is expected to announce its plans in February.


A bonus of 12 million shares in the bank, which is 83% owned by the
taxpayer, would be worth more than £3m based on the current share price.


The development will inflame the ongoing row about Mr Hester's pay
and comes as RBS chairman Sir Philip Hampton revealed he is not
accepting his £1.4m bonus for 2011.







Cameron On RBS Boss Hester's Bonus












Kleinman said the move was designed to "take the heat off" Mr Hester but it risks backfiring.


"Sir Philip Hampton believes that by relinquishing his own award, he will help to defuse the row over bonuses at RBS," he wrote.


A source at the bank said the decision was unlikely to change Mr Hester's position.


Sir Philip was appointed as chairman of RBS after its £45bn taxpayer rescue in Autumn 2008.



On Thursday, he defended the decision to award Mr Hester a bonus.


"The board is aware of the difficulties in trying to reconcile the
competing objectives of all our stakeholders. This is especially true on
the issue of pay," he said.


"His (Hester's) pay is strongly geared to the recovery of RBS, which
he was recruited to turn around, having played no part in its collapse.


"The priority is to reshape a business that was far too big and far
too risky, reducing legacy losses whilst improving performance in the
group's core businesses."

Hampton
is, I'm told, worried that Hester will resign if he becomes seen as one
of the villains of the banking sector on anything like a sustained
basis.

Sky's City editor Mark Kleinmann











Prime Minister David Cameron insisted it was up to Mr Hester to decide whether to give up his bonus.


"It's a matter for him," he said at Chequers. "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."


He added: "I think we need to get the facts straight. 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 but 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."

9:52am UK, Sunday January 29, 2012

Simon Newton, Sky reporter


Boardrooms should "wake up" to the gap between sky high executive pay and
public opinion, according to a new report.


A survey conducted for the independent monitoring body the High Pay Centre
found most people in Britain would like to see executive pay reduced, with many
believing top bosses pay is unfair and unjustified.


Only 7% of those questioned think the chief executive of a FTSE 100 company
should earn more than £1m a year, including bonuses and pension
contributions.


Just 1% believe Britain's bosses were worth the £4m plus which is now the
average for the heads of FTSE 100 companies.

Runaway executive pay has undermined the public's trust in business and we
believe Parliament and the business community should take stronger action to
curb it.

Deborah Hargreaves, director of The High Pay
Centre


The High Pay Centre's director Deborah Hargreaves said: "Top executive pay
and the behaviour of business are issues at the heart of the current public
debate about how we rebuild our economy.

"Our polling shows the public do not believe executives, even of the biggest
companies, should be awarded multi-million pound pay packages. It is time for
boardrooms to wake up to what is fair and act now to rebuild public
trust."


The ICM survey comes as the row rumbles on over Royal Bank of Scotland chief executive
Stephen Hester's share bonus for 2011, which is worth almost
£1m.

Sir Philip Hampton, the chairman of the bank which is 83% owned by the
taxpayer, has said he will waive his £1.4m bonus.


But Mr Hester has not said he will reject his and now Sky's City editor Mark
Kleinman has discovered he could receive up to 12 million shares as a bonus for
his work in 2012.

Prime Minister David Cameron has sidestepped calls to block his current
handout and said it was up to Mr Hester whether he chose to reject it or
not.

The High Pay Centre says two-thirds of those surveyed would like to see
ordinary workers included on the remuneration committees that set bosses
pay.

Around 70% of respondents also supported giving shareholders "binding powers"
to block pay packages for senior executives.



WPP chief executive Sir Martin Sorrell believes pay should
reflect performance



Ms Hargreaves said: "The public are squarely behind the case for reform.
People want to see rewards based on fairness.


"Runaway executive pay has undermined the public's trust in business and we
believe Parliament and the business community should take stronger action to
curb it."


However, some at the top of British business believe high pay - while
unpopular - is vital to attract and retain top talent.

"As long as it's pay for performance, I think it's the right thing," Sir
Martin Sorrell, chief executive of marketing communications firm WPP, told Sky
News.

"If I look at our competitors, they are paid even more competitively than
myself or indeed some of my colleagues so I think I would disagree with this
survey."


In December, the High Pay
Commissionpublished a 12-point plan to tackle pay inequality.


Earlier this month, Business Secretary Vince Cable unveiled plans to curb
executive pay including forcing firms to justify high salaries.


Labour have criticised the plan, saying it does not go far enough.

:41am UK, Monday January 30, 2012

The Royal Bank of Scotland has announced that its chief executive Stephen
Hester has decided to waive his £1m share bonus.


It comes just hours after the Labour Party said it
would force a House of Commons vote calling for Mr Hester to be stripped of his
RBS bonus.

Mr Hester had been facing mounting pressure to
follow the bank's chairman, Sir Philip Hampton, and forego the bonus which
he was awarded this week.

We need a Government that will tax bankers' bonuses and bring responsibility
to the boardroom.

Labour leader Ed Miliband


Sky News City editor Mark Kleinman said: "My understanding in is that Mr
Hester is abroad on holiday at the moment and only made the decision on Sunday
night.

"RBS shares are now languishing so much that British taxpayers risk a loss of
£10bn on their investment."

Kleinman added: "Stephen Hester has decided, after days of mounting
criticism about his million-pound bonus award, to relinquish that bonus.

"He has decided to waive it and he will not accept the 3.6 million shares
that he was granted by the board of directors.

"He has been saying to friends over the last few days that he does not see
any reason why he should give up that bonus, but I think the political pressure
on him has become intolerable.


Chuka Umunna: He's Done The Right Thing








"The Labour Party called for a vote in the Commons on the issue and Mr Hester
is said by friends of his to be deeply concerned by the fact that he is becoming
a pariah of the banking sector, despite the fact that he was parachuted in to
help turn RBS around after it was bailed out by British taxpayers in 2008.

"This is clearly an attempt by him to prevent the escalating row over his
bonus, distracting him from the job of running RBS, which is one of the biggest
corporate turnarounds in the history of the banking sector."

Shadow business secretary Chuka Umunna, who criticised the payment, said Mr
Hester was finally responding to public sentiment.

He told Sky News: "He is responding to public concern and criticism about the
level of renegotiation in the bank, in particular in relation to his
position.

"For somebody to listen and respond, we of course would not criticise
that."

He added: "Of course, the financial sector should be able to operate
properly, but it needs to command the confidence of the British people."

Sky News chief political correspondent Jon Craig
said Mr Hester came under pressure from the Government and Prime Minister David Cameron would be "relieved".

"He will be relieved because he had been made to look rather foolish and he
has been criticised by the Labour Party and by some of the Lib Dems for not do
more to prevent this happening," he said.

According to a near 500-page document released by
the Financial Services Authority, RBS required a 2008 £45.5bn
rescue after near-collapse came from business errors and light financial
regulation during the leadership of Sir Fred Goodwin.

RBS is now 82% owned by the Government and thus under extra scrutiny when it
comes to banker remuneration.

Labour leader Ed Miliband said foregoing the bonus was
"the right thing".

Mr Miliband said: "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."

Chancellor George Osborne also said the decision was
"sensible".

He now hoped Mr Hester could "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".

Taxpayers'
Alliance spokesman Matthew Sinclair said that both Labour and the
current Government had let down the British public over successive years with
RBS.

He told Sky News: "The Government needs to ensure the company is being run in
the interest of the taxpayer and not its staff."

Scottish First Minister Alex Salmond said: "This is a welcome development but
it should never have come to this stage as these circumstances cannot be left to
individual decisions. They must be a matter of public policy."













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Hester was employed by Gordon Brown and in his first year of Office, shares have reduced to 27 pence, yet it was not the shareholders who forced
this decision , it was David Cameron.

A young Investment Manager just discussing the news that Hester has reluctantly agreed not to accept the Bonus shares said he had done a good job at RBS and increased the price of shares by 25% in his first Year. He suggested that when the likes of Rooney can be paid exhorbitant sums for kicking a Ball around ,where is the logic.?

SLIGHTLY OFF TOPIC,FRED GOODWIN HAS HAD HIS AWARD STRIPPED FROM HIM.

Badboy wrote:SLIGHTLY OFF TOPIC,FRED GOODWIN HAS HAD HIS AWARD STRIPPED FROM HIM.

Yes, I saw that on the News...not before time.!!! There are many more Badboy who don"t deserve to be honoured.

Why do these high flying supermen have to be paid a bonus for doing the job they contracted to do? Especially a job which pays more than £1 million a year plus expenses with a car and chauffeur thrown in...

Why doesn't someone wake Miliband up and tell him to keep his childish mouth shut and stop embarrassing New Labour which set the bonus payments for Hester? It appears the present bunch of New Labour knuckle draggers in opposition is just as corrupt and oafish as Blair and Brown's previous pack of looters were during their 13 years in office.

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RBS Chair Attacks 'Anti-Business Ministers'

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6:16pm UK, Friday February 03, 2012

Mark Kleinman, City editor


Ministers should abandon a growing tendency to indulge in anti-business
rhetoric or risk damaging Britain's economic recovery, the head of the
state-controlled Royal Bank of Scotland (RBS) has warned.


In an interview with Sky News, Sir Philip Hampton said that leading
politicians could undermine inward investment in the UK if they continued to
demonise business.

He said: "I think we've got to watch it. I think some of the sentiment from
Government ministers and [other] politicians recently won't necessarily help
confidence in business morale and inward investment.

"We need to recognise that businesses have got to succeed and that when they
do so people can get very well paid.

"But overall I think Britain is still a great place to invest, to work and to
live. I’d like some of those messages to be more prominent from our political
leaders from time to time."


RBS bosses mis-judged the public mood over pay and bonuses




The comments from the chairman of a company which is
82% owned by the British taxpayer are remarkably frank - but they reflect a
growing sense of unease within the business community following the furore over the pay of Stephen Hester, RBS's chief
executive, and the decision to strip his predecessor, Fred Goodwin, of his
knighthood.

Sir Philip's remarks come at the end of a torrid week for RBS, which is
braced for further political anger later this month when the bank reports its
financial results for 2011.

"We will have some people on very substantial packages but we will have far
fewer than in recent years paid at the very highest levels. I would say some of
this concentration on bonuses is overblown. Our wage bill for the bank is
£8bn-9bn, so actually although bonuses get all the headlines they are a very
small part of the total wage bill," he told Sky News.

Nonetheless, Sir Philip acknowledged that RBS would have to alter the way it
paid its top executives if it is to avoid a similar row erupting in 12 months'
time.

"It's a difficult issue, clearly - we've had a clear demonstration of the
hostile public mood in the last week," he said.

"We could have got elements of our communications better. Having said that we
are a commercial organisation and we have to pay rates of pay to our top people
for this hugely challenging task that are reasonably consistent with the rest of
the market otherwise I don’t think we would be able to retain and incentivise
the people we need to turn this bank around."


Former RBS boss Fred Goodwin was stripped of his
knighthood



The RBS chairman, who was parachuted into the role alongside Hester in the
autumn of 2008 when the bank was bailed out with a £45bn injection of taxpayers'
money, rejected suggestions that pay at the bank was now being set by ministers
rather than the RBS board.

"I made the recommendation about the remuneration of Stephen Hester, which
was accepted and discussed by the board. We do consult with shareholders
including the Government, both as a shareholder and on the political aspects of
the decision.

"We haven’t received any direction from government at all. We received their
input which we try to take into account when we can."

Sir Philip denied that Hester had been on the verge of resigning over the
decision to relinquish his bonus of 3.6m shares - worth just under £1m at the
current share price - but admitted that the RBS board had drawn up plans for his
departure.

"All boards of directors have contingency plans for chief executives being
ill or leaving for other reasons.

"If you look around the world and try to find candidates to run one of the
largest banks in the world in this exceptionally challenging environment, it is
no surprise that that’s a very small list indeed of people who are ready,
willing and able to do this sort of job."

He also defended the pay policy of RBS, saying it had been a pioneer in
reforming the way bankers are remunerated.


Business secretary Vince Cable called for a crackdown on
boardroom pay



"We have led the way in British banking terms in getting our pay structures
more appropriately based - bonuses are all in shares, deferred and subject to
claw back. We have ticked every corporate governance box, but we clearly are not
carrying all our stakeholders along in the decision-making we are doing.

"It's very important that this bank does have the right people running it. We
are hugely important to the British economy and the bank is two-thirds of the
size of the economy on its own. We’ve got to get this right and we’ll only get
it right with the right people."

Referring to the crackdown by ministers on boardroom pay across British
business, Sir Philip also told Sky News that he agreed with proposals
outlined last month by Vince Cable, the Business Secretary.

"I think out-of-hand is too strong [a description for remuneration practices]
but the culture of pay is certainly not where it should be. There is a concern
that pay is too high, particularly when performance is weak," he said.

"The banking sector is at the epicentre of that. Returns to bank shareholder
have been pretty mediocre to disastrous and yet banker pay has become massive,
so there isn't a linkage. That is changing."