RBS remuneration package to be high on the agenda at AGM

The Royal Bank of Scotland (RBS), which is 84% owned by the Government, is set to unveil plans to toughen performance targets at its AGM in Edinburgh later this week, after consultations with shareholders.

According to reports, RBS chairman, Sir Philip Hampton, is expected to agree that the share price target element of the long-term incentive proposal was set too low.

Currently, RBS executives are due a significant amount of performance-linked rewards when the bank’s share price hits 50p. Shares closed at 55.8p on Friday - higher than the target level.

The 50p share price level was set earlier in the year, when the stock was around 30p.

The bank said: “An extensive consultation has been undertaken and the remuneration committee will give close consideration to the range of shareholders views before reaching a final position.

“The share price has been hugely volatile in the last year and that needs to be taken into account in a way that ensures the scheme is both motivating and exacting in performance terms.

“This is the board’s intent and the remuneration committee will endeavour to align all interests in the matter,” it added.

Senior executives at banks have been awarded significant bonuses despite reporting losses. Bonuses, in particular, have sparked public anger and have been the subject of heavy criticism since many believe their risks led to the recession.

In February, RBS posted a full-year loss of £3.6 billion and at the time, the bank’s chief executive, Stephen Hester, said he would not to take his £1.6 million bonus. The bank said he had agreed to waive his 2009 bonus amid public anger over the issue.

Discuss this in the Finance Markets forums

Story link: RBS remuneration package to be high on the agenda at AGM