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RBS defends chief exec's 'relatively low' pay package to MPs

by Michelle Abrego on Feb 12, 2013 at 07:29

RBS defends chief exec's 'relatively low' pay package to MPs

Royal Bank of Scotland (RBS) chief executive Stephen Hester defended his ‘relatively low’ pay package to MPs who questions whether his bonus should contribute toward the banks recent Libor fines.

Last week, RBS was hit with fines totalling £390 million over its Libor failings. It was reported that Hester was to receive his bonus despite the fine.

Hester (pictured) receives a basic salary of £1.2 miilion and is set to receive the payment in shares deferred from three years ago.

Hester denied accountability for the Libor-rigging to MPs while giving evidence to the Parliamentary Commission on Banking Standards, and defended his bonus by arguing he had done a lot of work to try to get RBS on the right track since he was joined in November 2008.

He said: ‘I think bonuses should be assessed on all things do well and badly, [it’s] not me that makes judgement.

‘I think that if you look at RBS that we took on four years ago, that we have done huge things to rescue a situation for that company and for society and for different stakeholders.’

He added that it was appropriate to be assessed on things done and not done and said he believed that the ‘nation is off the hook on a lot of bad things, yet not all the way off the hook’.

RBS chairman Philip Hampton jumped in to add Hester was doing one of the most demanding jobs and has been paid ‘relatively low paid’ for a chief executive.

He added that the board had not yet decided on the bonus pool.

3 comments so far. Why not have your say?

complacency rules

Feb 12, 2013 at 08:48

When I worked for a bank, many years ago now, I was always told that bonuses were paid on results not on efforts. I assume a key measure of results is the increase in shareholder value (at least if it is not then it should be) amongst other things. I do not begrudge Hester's large salary, but has there been a significant improvement is shareholder value over and above the general improvment in stock markets?

If and when RBS has signficantly increased profits, if and when, it has repaid the huge funds pumped in by the taxpayer, if and when, it has recovered its reputation as an organisation with proper moral standards then Hestor will have earned his bonuses, and I for one will not begrudge that. However, in the time being the Jury is out.

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Mad Eyes

Feb 12, 2013 at 08:55

maybe its time to stop the bonus completely. Salary + others benefits should be enough. We dont get bonuses or the majority of our clients dont either. So why should should they get one. Surely £1.2m salary, pension, holiday pay,sick pay etc is enough for most people?

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Usually found sitting on the fence

Feb 12, 2013 at 09:48

@ minimum wage it's enough for approx. 92 people.

In general I think that the only way top execs salaries can an will be maintained, in the future, is through ever increasing exploitation of their employees. While I believe there needs to be an incentive for people to rise above all else, there is a worrying perception that it is not the talent that rises, but a small group of elite friends (not all of which are competent in their roles).

I am against salary caps, as a Govt controlled limit on earnings, as it is wrong. However, big companies are raking in vast profits, becoming bigger companies, raking in bigger profits, the top exec salaries are rising (have risen) at an alarming rate above the lowest paid and therefore a benefit dependent culture has been created. Link the top exec salaries to their lowest paid employee (also include contracted out workers) and then in order to give themselves a big fat pay check, they need to be giving their lower income earners a suitable pay. Use a factor of 50, and a company that pays minimum wage is restricted to paying their execs less than £600,000. So a £1.2m salary needs the lowest earner to be on £13/hour... This would do more for society than limiting salaries, than hiking taxes and not raising the IHT threshold etc.

Finally all payments to an individual should be treated as income and taxed as such. bonuses should also be linked by a factor...

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