Articles

British Bank Boss Turns Down Disputed $1.5m bonus

30 Jan 2012

Views: 1,505

Font Size: a / A

300112F01.British-taxpayers.jpg - 300112F01.British-taxpayers.jpg

British taxpayers own 82 percent of RBS since it was bailed out at the height of the global financial crisis in 2008

AFP

The chief executive of Britain's state-rescued Royal Bank of Scotland has turned down his hotly-disputed bonus of shares worth close to £1 million, RBS said Monday, amid a row over executive pay.

Stephen Hester was due to receive a £963,000 ($1.5 million, 1.15 million euro) bonus this year on top of his £1.2 million salary, the bank had said Thursday.

That announcement -- amid government calls for pay restraint during the continuing economic gloom -- sparked outrage from trade unions and the opposition Labour Party.

But the bank said Hester would not be taking the shares after all.

"I can confirm that he has decided not to accept the bonus," an RBS spokesman told AFP.

The fact that the sum was less than half the £2 million Hester was given a year earlier had failed to dent the criticism.

British taxpayers own 82 percent 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.

Hester's move was welcomed by finance minister George Osborne.

"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," the chancellor said.

The announcement came after the opposition Labour Party said it planned to force a parliamentary vote calling for Hester to be stripped of the bonus, as it sought to heap pressure on Prime Minister David Cameron's coalition government over the issue.

The government had been criticised for not stepping in, but ministers insisted it was a decision best left to Hester.

"The judgment we had to make was: should we go further, as many of us would like to, and say, let's have no bonus at all?", Danny Alexander, chief secretary to the Treasury, told BBC television.

"Have the government taking control directly of RBS, and therefore causing potentially much bigger financial risks to the taxpayer?"

Work and Pensions Secretary Iain Duncan Smith said the government could not interfere with the RBS board and so would have been forced to get rid of the body altogether to strip Hester of his bonus, a move which would have caused "chaos".

"Stephen Hester has done the right thing," said Labour leader Ed Miliband.

"It is a shame that a feeble, out-of-touch David Cameron did not realise he should do the right thing and stand up for the interests of the British people.

"The debate about fair executive pay and responsible capitalism is only just beginning. We need a government that will tax bankers' bonuses and bring responsibility to the boardroom."

Scottish First Minister Alex Salmond said: "This is a welcome development but it should never have come to this stage as these circumstances cannot be left to individual decisions. They must be a matter of public policy.

"The sustaining of public services, and therefore economic recovery, requires pay restraint across the public sector.

"How can that be maintained against the background of huge bonuses being paid in organisations which are still within the public sector? This blatant inequality thus threatens economic recovery."

RBS announced on Saturday that chairman Philip Hampton had waived a shares bonus worth £1.4 million (1.7 million euros, $2.2 million).

Tags: Business, British Bank, World

Comments: 0

Rating: 

 (0)
Add your comment

Please leave your comment below. Your name will appear next to your comment. We'll also keep you updated by email whenever someone else comments on this page. Your comment will appear on this page once it has been approved by a moderator.

comments powered by Disqus