ROYAL Bank of Scotland has confirmed it is reviewing the incentive package for chief executive Stephen Hester, but denied that this will lead to him being given greater rewards.
Reports yesterday suggested that the RBS board had been forced to re-evaluate Hester's bonus entitlements after institutional investors warned that its initial proposals were not generous enough.
Hester, who was appointed to head the bank in Octob
er, is paid a basic salary of £1.2 million and has already been awarded 10.4m shares as compensation for share options he forfeited when he left his previous position at British Land.
But the bank is assessing what it should give him in share awards and options should he be able to lead a turnaround at the bank that prompts a recovery in its share price.
RBS has reportedly proposed Hester be given up to 4.8m share awards and a further 8.2m share options with an exercise price of 35p if the bank's shares hit 70p within three years.
It is understood that chairman Sir Philip Hampton has proposed a new scheme that would see Hester be rewarded with up to 18 million shares, although the targets for the full amount would also be more challenging.
In the first few months of Hester's tenure RBS shares have swung wildly, closing at 39.9p on Friday – having dropped to 11.6p in January, and closed as high as 48p on one occasion in May.
A spokesman confirmed the bonus package was being assessed and that investors were being consulted, but declined to comment on the reaction to these.
The bank said in a statement: "The incentives package for Stephen Hester, who joined at a time of crisis, is designed to align his interests with those of shareholders and nothing will be paid out until and unless the performance criteria are met.
"He is leading a major corporate turnaround and will only gain anything after three years if he succeeds. The detail is being worked on and is not yet finalised."
