THE GUARDIAN: But Stephen Hester tells MPs that although his bonus package could be worth up to £10m, it is currently worthless as shares in the state-controlled bank have failed to rise
Stephen Hester, chief executive of Royal Bank of Scotland, admitted today that his parents believe he is paid too much as he stressed that his bonus package was currently worthless because the bank's shares had failed to rise.
Asked by the Treasury select committee of MPs whether he understood why the government wants to restrict bonuses at the state-controlled bank, Hester replied: "Yes".
He insisted that the bank did not yet know the size of the bonus pot that would be split between its 22,000 investment bankers. Hester also revealed that a "handful" of highly paid bankers would avoid the restriction placed on the bank not to pay cash bonuses to anyone earning more than £39,000 because of legal commitments made to them.
He told the MPs, who are also taking evidence from his counterparts at Lloyds Banking Group and Northern Rock, that his "biggest single business problem" was recruiting people who were concerned about the criticism they might encounter if they work for RBS.
Institutional investors had "raised concerns about our ability to keep and motivate good people".
The bank would not tell staff whether they will get a bonus and how large it would be until the end of February, he said.
The Treasury has a power to veto bonuses at the bank under the terms of insuring £282bn of troubled loans through the asset protection scheme (APS). Hester insisted no board directors have threatened to resign as a result of this restriction and insisted he wanted to pay "the minimum possible while keeping staff engaged".
Of his own pay deal, which is linked to the RBS share price but could be worth almost £10m over three years, Hester said: "If you ask my mother and father about my pay they'd say it was too high as well, so some people close to me have that view of bankers." >>> Jill Treanor | Tuesday, January 12, 2010
THE GUARDIAN – BUSINESS BLOG: Bank pay row reaches a crescendo: Banks are preparing to snub the politicians and begin a bumper bonus round later this week. First they have to brave a few final assaults: Obama's threatened tax in America and the House of Commons Treasury committee >>> Dan Roberts | Tuesday, January 12, 2010
