RBS agrees to reduce CEO’s potential bonus

18 May 2010

The Royal Bank of Scotland (RBS) has reduced the size of its chief executive officer’s (CEO) potential bonus after shareholders claimed the targets were too easy to reach.

According to the financial institution, the value of RBS shares will now need to reach 57.5p for Stephen Hester, the bank’s CEO, to receive a bonus.

The figure has been raised from the original share price target of 50p while the maximum pay out Mr Hester could receive as part of the three-year payment plan is now £4.2 million, £600,000 less than originally set out.

RBS’s individual share price must reach 77.5p over the period, up from 75p, for the CEO to receive the maximum bonus available.

Sir Philip Hampton, RBS chairman, told the Daily Telegraph: "This plan is the result of a long, thorough and constructive consultation with shareholders. The board has asked the leadership team to deliver a challenging turnaround plan, and shareholders will benefit substantially if they succeed."

Mr Hester did not accept the £1.6 million bonus he was entitled to last year.

Meanwhile, RBS has announced plans to let 2,600 staff members go from its retail and insurance divisions.

By Jim Ottewill

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development