RBS CEO’s parents believe he is overpaid
(18 January 2010 – UK) The Royal Bank of Scotland’s (RBS) chief executive officer, Stephen Hester has said that his share reward scheme is ‘worth virtually nothing’ but admits his parents believe he is over-paid.
The investigation into the pay and bonuses received at state-controlled banks such as Northern Rock, RBS and Lloyds Banking Group saw the chief executive officer of RBS confronted by questions from the Treasury Select Committee.
Mr Hester, who replaced Sir Fred Goodwin, has been responsible for the bank since it was bailed out by the government in October 2008.
The CEO also said that he only asked to be paid the ‘going rate’ for his position and also agreed to take no cash for his bonus, which is linked to the share price, that could be worth as much as £10 million (A$17.6 million) over three years.
However, Mr Hester said that his bonus is worth very close to nothing at the moment because the share price has not risen.
The bank head also added that if his mother and father were asked about his pay, they would say it was too high. Mr Hester also said others close to him share this opinion of bankers.
The CEO refused to comment whether his staff would receive bonuses, due at the end of the month, nor would he comment on the size of the bonuses if paid.
Shareholders for the group have raised concerns about the banks ability to retain and motivate good staff. Mr Hester said that the shareholders wanted bonuses to be no larger than necessary to keep staff on board.
While there have been no threats from executives to resign over the uncertainty of the bonuses, Mr Hester said he wanted to pay the minimum possible to keep people engaged.
Mr Hester highlighted that the Royal Bank of Scotland, which is 84 percent owned by the Treasury after a series of bailouts, is progressing well with plans to cut debt and assets.
Mr Hester, who replaced Sir Fred Goodwin, has been responsible for the bank since it was bailed out by the government in October 2008.
The CEO also said that he only asked to be paid the ‘going rate’ for his position and also agreed to take no cash for his bonus, which is linked to the share price, that could be worth as much as £10 million (A$17.6 million) over three years.
However, Mr Hester said that his bonus is worth very close to nothing at the moment because the share price has not risen.
The bank head also added that if his mother and father were asked about his pay, they would say it was too high. Mr Hester also said others close to him share this opinion of bankers.
The CEO refused to comment whether his staff would receive bonuses, due at the end of the month, nor would he comment on the size of the bonuses if paid.
Shareholders for the group have raised concerns about the banks ability to retain and motivate good staff. Mr Hester said that the shareholders wanted bonuses to be no larger than necessary to keep staff on board.
While there have been no threats from executives to resign over the uncertainty of the bonuses, Mr Hester said he wanted to pay the minimum possible to keep people engaged.
Mr Hester highlighted that the Royal Bank of Scotland, which is 84 percent owned by the Treasury after a series of bailouts, is progressing well with plans to cut debt and assets.
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