ROYAL Bank of Scotland has handed four of its senior executives share bonuses worth close to £5m, risking fresh accusations of excessive executive pay at banks that had to be rescued by taxpayers.
Ellen Alemany, the head of the bank’s American business, could receive close to 6m shares in RBS under the bonus deal – worth £2.4m based on Friday’s closing price.
Three other senior executives have been promised shares under the scheme, including corporate banking bosses Alan Dickinson and Chris Sullivan, and the bank’s chief administration officer, Ron Teerlink.
Vince Cable, the deputy leader of the Liberal Democrats, described the awards as “completely unjustifiable” and “utterly unacceptable”.
“Without the billions poured into RBS by the taxpayer there would be no company,” Cable said. “This is not the right time for the bank to be awarding such bonuses – especially to senior staff.
“It was the senior executives who were ultimately responsible for RBS’s collapse. It’s the money poured in by the taxpayer that make these share awards so valuable.”
News of the potential pay-outs follows the political storm earlier this year over the bank’s plans to pay close to £1 billion in bonuses to its staff, just weeks after it was forced to go cap in hand to the government.
After racking up £28 billion of losses last year RBS was bailed out by taxpayers, who now own more than 70% of the bank’s shares.
The bank has also been mired in controversy over former chief executive Sir Fred Goodwin, who has a pension worth £700,000 a year.
Details of the latest bonus awards were buried in a stock exchange announcement issued on Friday.
The performance criteria that will determine whether or not the bonuses are paid out will be decided as part of the bank’s ongoing strategy review, which is expected to be completed this summer. The targets will be linked to the bank’s three- to five-year recovery plan being implemented by new chief executive Stephen Hester.
An RBS spokesman said the bank is under no obligation to disclose the criteria, but said there “will be no reward for failure”. He added: “Nothing will be paid until and unless performance criteria are achieved, and awards are subject to clawback if executives fail to hit targets.”
Matthew Sinclair, research director at the Taxpayers’ Alliance, said: “RBS need to understand that, so long as they’re being supported by the taxpayer, it is completely unacceptable to pay out these big bonuses.
“Ordinary taxpayers, struggling to cope in a recession, can’t be expected to finance millions of pounds in bonuses for wealthy bankers.”
May 24, 2009
Iain Dey
Source: The Sunday Times