RBS chief to forgo £1 million bonus
Royal Bank of Scotland (RBS) Chief Executive Stephen Hester has agreed to waive his hefty £1 million bonus, amidst political pressure.
Hester, whose 3.6 million shares are worth around £960,000, announced his decision on Sunday following threats from the opposition Labour party to force a House of Commons vote on the issue. The vote, although non-binding, could have forced the government to block the payment; in the past a similar vote forced Robert Murdoch’s News Corporation to drop its bid for satellite broadcaster BSkyB.
Over the weekend, RBS Chairman Sir Philip Hampton decided to waive a bonus potentially worth £1.4 million – and the move was largely seen as a signal to Hester to follow suit.
Secretary of State for Business Vince Cable hailed Hester’s decision as “a very welcome move”.
The troubled RBS was bailed out by the taxpayer in October 2008, and Hester was brought in to turn the bank around. It has been felt that his £1 million bonus could not be justified in a bank that is still 82% owned by the taxpayer.
“Stephen Hester has done the right thing. It is a shame out-of-touch David Cameron did not realise he should also do the right thing,” Labour leader Ed Miliband has said.
Miliband also said his party 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.”
Prime Minister David Cameron has been sidestepping calls to block Hester’s award, saying his priority was to bring the bank back to health.
“My decision is to make sure the team at RBS get on with the job of turning the bank around. We made our views very clear on the bonus and that’s why it was cut in half compared to last year.”