RBS chief exec set for £9.6m pay package

| June 22, 2009 | 0 Comments

Royal Bank of Scotland (RBS), which is almost 70% owned by the taxpayer, is set to spark public outrage again with the news that chief executive, Stephen Hester, is in line for a £9.6 million pay deal.

The bank, which is expected to approve the package this week, has also hit the headlines this weekend with The Mail on Sunday reporting that the bank is set to spend up to £300,000 entertaining at Wimbledon.

The bank’s top executives will receive a ‘corporate hospitality’ package at the tennis championship which includes gourmet food and bottles of vintage champagne, worth £75 a bottle.

The luxurious entertainment suite, reserved by the bank, is set to cost almost £20,000 a day, according to the newspaper.

Returning to Mr Hester, his remuneration deal was agreed last week by Sir Philip Hampton, the bank’s chairman and its leading shareholders.

The pay package is believed to comprise of a £1.2 million salary and up to £2 million of annual non-cash bonus payments and £6.4 million in long-term incentives.

A spokesperson for RBS said that the deal had been agreed but was in the process of being finalised by the bank’s board. “We have said consistently it is all linked to performance and will only be paid out if targets are met,” said the spokesperson.

The size of the package is expected to provoke anger again among the public who have been reeling over the controversial pension entitlement awarded to former RBS chief executive, Sir Fred Goodwin.

While Sir Fred bowed to public pressure and agreed to hand over £4.7 million of his much-talked about £17 million pension, the fact remains he and former ex-chairman Sir Tom McKillop, were both blamed for the near collapse of the bank.

Sir Fred was also blamed for the purchase of Dutch bank, ABN Amro, which took place on the eve of the credit crisis. However, he and Sir Tom have since admitted this was a “big mistake”.

RBS had to be bailed out last autumn to the tune of £20 billion, which left the bank 68% state-owned.

Earlier this year, the bank announced a full 2008 year loss of £24.1 billion - the largest annual loss in UK corporate history. Since its bailout of £20 billion last autumn, the bank has axed 15,000 jobs.

Mr Hester, who is the former chief operating officer of Abbey National and chief executive of British Land, took over as chief executive following the departure of Sir Fred late last year.

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