AFP/London
The chief executive of state-rescued Royal Bank of Scotland (RBS) has bowed to intense political pressure and waived his annual bonus worth almost £1mn, the lender said yesterday.A bank spokesman confirmed that Stephen Hester has decided to forego a bonus of £963,000 in shares that was awarded last week, on top of his £1.2mn salary.The huge award - amid government calls for pay restraint, ongoing austerity and economic gloom - sparked outrage among trade unions and the opposition Labour Party because RBS is 82% state-owned following a huge bailout.Labour vowed at the weekend to force a parliamentary vote to call for Hester to be stripped of the bonus, piling enormous political pressure on the lender, while the bank’s chairman renounced his own bonus on Saturday.The government welcomed Hester’s decision to spurn the payment, which was proving a major embarrassment for the Conservative-Liberal Democrat coalition that has pledged to crack down on excessive boardroom pay.“This is a sensible and welcome decision that enables Stephen Hester to 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,” Finance Minister George Osborne said.A spokeswoman for Prime Minister David Cameron stressed that it was “a matter for individuals” whether they would accept bonuses.“The prime minister’s view was that he wanted the bonuses to be lower. He always made it clear that it was a matter for Hester whether he took that bonus or not, and that should remain the case.“Reward for good performance is not in itself a bad thing,” she added. The controversial issue will likely resurface however since Hester’s future bonuses could potentially reach £6.4mn under the terms of a long-term incentive plan.John Hourican, the boss of RBS’ investment banking division, stands to earn a bonus of up to £4.5mn in shares later this year.Labour leader Ed Miliband, who had last week accused Cameron of a “failure of leadership” over Hester’s bonus, called for more action. “I think it was the threat of that parliamentary vote that led to change but I don’t think this can be just a one-off episode,” Miliband said yesterday. “If we don’t deal with this systematically, if we don’t deal with the issue of bankers’ bonuses in a proper way, this kind of thing will just reoccur.”Taxpayers own the vast majority of RBS since it was bailed out at the height of the global financial crisis in 2008. Since then, it has slashed tens of thousands of jobs. Britain’s biggest trade union Unite argued that the executive pay bonuses highlighted the “hypocrisy” of RBS.“This gesture goes some way in acknowledging the hypocrisy of an organisation which has sacked over 21,000 staff, while still attempting to pay bumper bonuses to the bosses,” said senior Unite official David Fleming.
Miliband urges tough stance on executive payLabour leader Ed Miliband yesterday urged tougher action to rein in the bonus culture after Royal Bank of Scotland chief Stephen Hester was pressured into giving up £1mn. He called for “a decisive shift in behaviour” including a bonus tax and for employees to have a say on executive pay following the row over the state-owned bank. “People are not against rewards for outstanding success or risk,” he said in a speech in Glasgow. “But they want to live in a country where there is fairness when it comes to the fruits of success and fairness when it comes to the need for sacrifice.” His call came as controversy was building over other bonuses, including a pay package of up to £10mn mooted for Barclays chief Bob Diamond.