The fact that he has to deliver high profits to pay back the government is fine though he has high incentives to turn these profits in only three years and that sounds much too risky. To get those profits he will have to substantially raise the share price. Most disturbing though is that shareholders and unions have balked at this but as usual, they've been ignored. For the umpteenth time, shareholders voiced their opposition and were ignored. Hard to believe non-binding votes such as Obama's "say on pay" never work. Worse still is that in this case it was the governments team who ignored and rejected the vote. Go figure.
A pay deal for Stephen Hester, the Royal Bank of Scotland's chief executive, which could reach £15m provoked anger from unions, shareholders and politicians last night as the state-controlled bank reignited the public furore over boardroom pay.Not bad for someone who already received a massive pay increase when he accepted the job in the first place. Now he's lined up to make a windfall at the expense of everyone else.
RBS was accused of missing an opportunity to set an example and put a lid on bankers' pay following the £20bn taxpayer bailout of the Edinburgh-based bank in which the government has a 70% stake.
City institutional investors believe the bank should reconsider Hester's pay package which comprises cash, shares, options, credit notes and debt and will pay out its maximum amount in three years if the taxpayer makes an estimated £8bn profit on its shareholding in the bank.
But the call by RBS's traditional investors went unheeded as the deal has been ratified by UK Financial Investments (UKFI), the body that controls the government's stakes in the bailed-out banks.
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